How does Rest Less make money
We make money through advertising and commission from affiliate links, which enable us to offer Rest Less as a free service to our users. The content on this page may use affiliate links, which track traffic from our website to a third party provider and enable us to receive a commission or payment from any traffic we refer.
* Affiliate links on this page have an * next to them. We place enormous importance on our editorial independence and the integrity of our content which means that we will never change how we write about something as a result of an affiliate link.
After years of healthy returns on savings, the tide is turning, so it might be time to rethink where your money will work hardest.
Several providers offered accounts paying more than 6% in 2023, but six base rate cuts since the summer of 2024 mean that the best returns on offer are currently nearer the 4.5% mark.
If you haven’t checked your savings account recently, you may be in for an unpleasant surprise as many of the best deals have already disappeared. If your money is languishing in a low-paying account, then it’s time to take action, as you could be missing out on hundreds of pounds of extra interest each year.
According to financial website Moneyfactscompare.co.uk, more than 90% of savings providers have lowered rates in some form since August 2025. Over the course of a year, this (and two other base rate cuts in February and May) saw the Moneyfacts Average Savings Rate fall from 3.68% in December 2024 to 3.40% by the start of December 2025.
Rachel Springall, spokesman for Moneyfactscompare, said: “Variable savings rates are especially vulnerable to changes to the base rate, with typical returns on easy access and notice accounts dropping 0.42 and 0.60 percentage points to 2.54% and 3.50%, respectively, year-on-year. In fact, more than three-quarters (77%) of easy access accounts currently on sale pay less than 3.75%, with only one in 10 offering more than 4.00%.”
Here, we explain what you can do to make sure your cash is earning the best possible returns.
Why are savings rates falling?
Savings rates are closely linked to the Bank of England’s base rate – the official interest rate that influences how much banks charge borrowers and pay savers.
Between December 2021 and August 2023, the base rate rose from just 0.1% to 5.25%. As a result, savers saw returns from deposit accounts soar to levels they hadn’t seen for more than a decade.
However, inflation, or the rate at which the cost of the goods and services we use increases, rocketed, peaking at 11.1% in October 2022, the highest rate in over 40 years, before gradually falling back to the government’s 2% target by May 2024. This paved the way for the Bank of England to start cutting interest rates to encourage spending and growth. Interest rates tend to rise when living costs are higher to help cool the economy and bring inflation down, and fall when inflation is easing. That’s because cheaper borrowing costs encourage individuals and businesses to spend more.
As a result, interest rates and, consequently, savings returns have fallen gradually since the middle of 2024, with markets expecting the Bank of England to cut rates further in 2026. This is by no means a certainty, however, especially as inflation is currently higher than the government’s 2% target at 3.2% in the 12 months to November 2025.
One thing is for certain, however, and that’s that savings rates are currently on the way down, so it’s crucial to review your returns now and see if your money could be doing better elsewhere.
The risk of staying loyal to your provider
Banks often tempt new customers to open accounts with them by offering attractive headline rates, only to reduce them a few months later. As a result, one of the biggest dangers for savers is apathy.
For example, your savings might be sitting in an easy access account paying 0.50% or even less – despite much better deals being available elsewhere. This so-called ‘loyalty penalty’ means long-standing customers often lose out the most.
The impact of seeking out higher rates can be significant, especially if you’ve built up a decent nest egg.
For example, if you have £20,000 in a savings account paying 0.75%, you’ll earn just £150 in interest over a year. If you move it to an account paying 4.5%, you’d earn £900 – a difference of £750.
That’s money that could help with household bills, boost your holiday fund, or simply provide you with extra financial security in retirement.
What are the best savings options right now?
The right savings account for you will depend on what you need it for – whether that’s flexibility, guaranteed returns, or easy access to your money. Here, we look at the various different types of savings accounts, and where to find the best rates.
Easy access accounts
These allow you to dip into your savings whenever you need them. Rates have slipped from their peak, but you can still find competitive deals around 4% or more.
Top 5 Easy Access Accounts
Fixed-rate bonds
If you’re happy to lock your money away for one, two or even five years, you can often secure a better return. Just remember you won’t usually be able to make any withdrawals during the fixed rate period without incurring a penalty.
Top 5 Fixed Rate Accounts
Cash ISAs
Cash individual savings accounts (ISAs) offer tax-free interest. With the personal savings allowance at £1,000 a year for basic-rate taxpayers and £500 for higher-rate taxpayers, many people don’t pay tax on savings interest anyway, but ISAs can still be useful if you have larger sums. You can find out more about the personal savings allowance in our guide What is the Personal Savings Allowance?
Top 5 Easy Access ISAs
Other ways to boost your savings
Other than shopping around regularly, there are other ways you might be able to give your savings a boost and ensure you earn the best possible returns.
- If you have a fixed rate savings account, set yourself a calendar reminder when it matures. Your money could be moved into a low-interest-paying account afterwards unless you act.
- Don’t just stick with the names you know as often the smaller providers, such as challenger banks and building societies, pay higher rates than the big high street banks.
- It’s usually a good idea to split your savings according to how you intend to use them. For example, you might want to keep some money in easy access for emergencies, and consider locking the rest away for better returns. Find out more about emergency savings in our guide How to build an emergency fund.
- Consider using savings apps if you want to top up your savings regularly. Some apps, such as Moneybox, enable you to ‘round up’ your purchases to a certain amount and if you want to, you can then transfer the difference into a savings account. The idea is that you save little and often without putting your budget under too much strain. Read more in our article Four ways to save on a tight budget.
A final thought…
Savings rates are falling, and the best deals may not be around for long. If you haven’t checked your savings account recently, now is the time to do so. Even a few minutes spent moving your money could make a big difference to your annual income.
So, don’t let loyalty to your bank cost you. Take action today and make sure your savings are still working as hard as possible for you.
If you’re saving towards a goal that’s at least five to 10 years away, you might want to consider investing rather than keeping your money in a savings account – but only if you’ve got a strong appetite for risk.
Over long-term periods, shares tend to perform better than cash, although there are no guarantees that this pattern will continue in the future and you’ll need to be comfortable with the fact you could end up getting less than you put in. Learn more about investing in our guide to Investing – the basics.
Rest Less Money is on Instagram. Check out our account and give us a follow @rest_less_uk_money for all the latest Money News, updated daily.
Join the discussion
Read our full commenting terms and guidelines