Savers may want to get their skates on to benefit from the top-paying savings accounts, with several providers having raised rates in recent weeks.
If you’re lucky enough to have some spare cash available, then now’s a good time to ensure it’s working as hard as it possibly can for you. Conflict in the Middle East has raised fears that inflation may remain higher for longer, which means markets no longer expect interest rates to fall this year.
Here, we explain what sort of returns you can currently expect to earn on your savings and where to find the top-paying accounts.
How much interest can I earn on my savings?
With interest rates currently still higher than inflation, which rose to 3.1% in the year to August 2026 and is expected to tick up further in coming months, savers are still in a relatively strong position – for now, at least.
Alice Haine, head of personal finance at Hargreaves Lansdown, said: “Savers may have been enjoying more competitive savings rates of late, but the benefit only applies to those who actively shop around for the best deals. Anyone whose money is sat languishing in an account with an ultra-low rate is losing real value every month.
“While rising bills will feel all too familiar for households still recovering from the darkest days of the cost-of-living crisis, building a healthy emergency fund is one of the best ways to strengthen financial resilience. As a rule of thumb, those of working age should aim for at least three months’ worth of essential expenses in cash, while for retirees it’s between one and three years’ worth.”
What are the top savings accounts?
With living costs still high, it’s more important than ever to ensure you’re earning as much in interest as possible on your cash savings.
Easy-access savings accounts usually enable you to take your money out whenever you want, without any loss of interest. It’s generally considered wise to have three to six months’ worth of essential spending in an easily accessible account to cover any unexpected costs, such as car repairs or a boiler breakdown. You can find the current best deals in our article Best instant access savings accounts revealed.
Top 5 Easy Access Accounts
Alternatively, you may decide to save into a cash ISA for tax-free interest, if you aren’t using this year’s £20,000 annual allowance to invest elsewhere. Next year, the cash ISA allowance reduces to £12,000 for those aged under 65, so many people may be looking to make the most of this year’s higher allowance. Read more in our article Best cash ISA rates – which cash ISAs pay the most interest?
Top 5 Easy Access ISAs
Fixed-rate bonds usually pay more than easy access accounts, but you can’t generally withdraw money from this type of savings account before the term ends without penalty. If you need to get your hands on your money urgently, you can close the account, but more often than not this will mean some charges, such as loss of interest. However, you will have the security that the interest rate will remain the same until the end of the account term. Find more information about these accounts and the top rates in our article Fixed rate savings bonds explained.
Top 5 Fixed Rate Accounts
What should savers do?
See if you can get a better return on your savings elsewhere. Check savings websites such as Raisin, or price comparison sites such as Moneyfactscompare or GoCompare to see if you can find a higher interest rate to move to.
Savers with sizeable pots must still pay close attention to their Personal Savings Allowance (PSA). Higher rate taxpayers only have a £500 personal savings allowance before they must pay tax on the interest they earn – half that of a basic rate taxpayer – while additional rate taxpayers have no allowance at all. This creates a growing tax headache as interest income rises, which is why a tax-efficient savings strategy is a must.
Making full use of the current £20,000 ISA allowance or topping up a pension can help shield savings from tax. Making money work harder is important as investing typically delivers a higher return than cash over the long term, though investors must be prepared to put their money away for at least five more years to ride out any short-term volatility in the markets. That’s why access to the right guidance is crucial, especially for novice investors navigating investment decisions for the first time.
You can find out more about the Personal Savings Allowance in our article What is the Personal Savings Allowance? and about ISAs in our guide Everything you need to know about ISAs.
If you already have plenty of cash savings set aside that you can access at any time, you may want to consider investing for long-term gains. After all, savings rates are not high enough to keep up with rising living costs. Meanwhile, stock markets have fallen substantially this year, which could make it a good time to be invested to benefit for the long term. Find out more in our article Investing – the basics and Savings accounts or shares – which is the best option?
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