Sponsored by Raisin UK
If you’re looking for a home for your savings, you might be tempted to go straight to the bank you hold your current account with, but this could see you miss out on much more competitive returns elsewhere.
For example, analysis of savings rates between January and June 2024 carried out by consumer champion Which? found that high street banks lag far behind their rivals. In January, major banks were paying an average of just 1.9% on instant access accounts, despite the Bank of England base rate being at 5.25% (the base rate has subsequently fallen to 5%). In comparison, building societies averaged 2.9%, whilst so-called challenger banks – set up to compete with the big banks – provided 3.3%. By June, the average rate for major banks had fallen to a paltry 1.6%, while the rates offered by building societies and challenger banks remained stable.
Even if you are prepared to put in a bit of legwork and research different savings accounts yourself, with many hundreds to choose from, it can be difficult to know whether you’ve found the best account for you.
That’s where Raisin can help. It offers a competitive marketplace for savings, enabling you to choose from a wide selection of high interest-paying accounts from 40 banks and building societies. These include challenger banks and those not found on the high street. You can apply for as many accounts as you want, with peace of mind that all your savings will be held under the same roof as they grow.
Here, we explain the different types of savings accounts, how Raisin works, and how it can help you find the best savings rates.
Top 5 Easy Access accounts
by Raisin UK
Interest (AER): 4.87%
Interest on £5,000:
+£247
Guarantee:
£85,000
Interest (AER): 4.67%
Interest on £5,000:
+£237
Guarantee:
£85,000
Interest (AER): 4.50%
Interest on £5,000:
+£228
Guarantee:
£85,000
Interest (AER): 4.46%
Interest on £5,000:
+£226
Guarantee:
£85,000
Interest (AER): 4.39%
Interest on £5,000:
+£223
Guarantee:
£85,000
Why finding the best savings rates matters
You’ve worked hard to build up your savings, so you’ll want to know that they are working as hard as they possibly can for you too.
Leaving your money languishing in a low interest-paying account could see you miss out on hundreds, if not thousands, of pounds in interest over time. For example, someone putting £20,000 of savings into an easy access savings account paying 1.6%, would receive monthly returns of £26.67, or £320 over a year. If, however, they put their money in an easy access savings account with a challenger bank paying an 3.3% (the average easy access rate offered by challenger banks, according to Which?), their monthly earnings would more than double to £55, or £660 over a year.
It’s worth noting that these are just average rates too – it’s possible to earn much higher returns, with some providers paying as much as 4.91% on their easy access savings accounts at the time of writing. The same saver with £20,000 in savings could earn £81.83 a month in interest at this rate, or £982 a year, which is a whopping £662 more than they could’ve earned if they’d left their money in an instant access account paying 1.6%.
The lower the savings returns you earn, the greater the risk that the cost of goods will rise more quickly than the value of your savings and your money will buy less than it used to. However, this needn’t happen, as there are currently numerous accounts offering competitive inflation-beating returns – provided you know where to look.
Kevin Mountford, co-founder at Raisin UK said: “Every day there are still millions sitting in low to no-interest bearing accounts, like current accounts, where inflation hits full force and the money loses value.”
Which type of savings accounts pay the best savings rates?
When choosing which type of savings account is right for you, it’s important to consider how frequently you’ll need access to your savings. The highest savings rates are typically found on fixed rate accounts, which usually require you to tie up your money for the term of the account. These can range from three-nine months to one-five years.
If you think you’re going to need to withdraw your savings soon, then a fixed rate savings account may not be the best option, even if it offers you returns higher than those available from easy access accounts. Instead, you may want to consider either an easy access account, or a notice account, which allows withdrawals provided you give an agreed amount of notice in advance.
When choosing which type of savings account is right for you, you also need to consider your tax position carefully too. If, for example, you have a substantial amount of savings, you could be in danger of breaching your Personal Savings Allowance, which is the amount of interest you can earn on your savings each year without having to pay tax on it. You can get up to £1,000 a year in savings income tax-free if you’re a basic rate taxpayer, reducing to £500 a year if you’re a higher rate (40%) taxpayer. You don’t get a savings allowance if you’re an additional rate (45%) taxpayer.
Most people won’t pay tax on their savings thanks to the Personal Savings Allowance, but if you do have a large amount of savings or you’re an additional rate taxpayer, tax-efficient individual savings accounts (ISAs) are also an option. However, if this doesn’t apply to you,you might be able to secure a more competitive interest rate with a fixed rate bond.
Top 5 Fixed Rate Accounts
by Raisin UK
Interest (AER): 4.80%
Interest on £5,000:
+£240
Guarantee:
£85,000
Term:
1 year
Interest (AER): 4.70%
Interest on £5,000:
+£235
Guarantee:
£85,000
Term:
1 year
Interest (AER): 4.65%
Interest on £5,000:
+£58
Guarantee:
£85,000
Term:
3 months
Interest (AER): 4.65%
Interest on £5,000:
+£174
Guarantee:
£85,000
Term:
9 months
Interest (AER): 4.63%
Interest on £5,000:
+£58
Guarantee:
£85,000
Term:
3 months
How does Raisin work?
Raisin aims to be a kind of ‘one-stop shop’ for your savings, enabling you to choose from some of the best savings rates available across the savings market.
When you’ve compared rates and found the right account to suit your needs, you sign up to Raisin either via its website or app, and open an account. You then transfer any money you want to save into this account and it can be used to open and manage any number of savings accounts with Raisin’s partner banks, with no fees involved.
This removes a layer of admin as you don’t have to send money to multiple different banks – instead it can all be transferred from your account into the accounts you want to open with just a few simple clicks rather than filling out often lengthy application forms. You’re not charged anything to use the service because Raisin earns an intermediary fee from its partner banks, who pay them for every account opened though its marketplace.
Raisin currently offers a range of fixed rate bonds, notice accounts and easy access accounts through its partners, which include Charter Savings Bank, Investec, Kroo Bank, OakNorth Bank, RCI Bank and SmartSave among others.
Savings made easy with Raisin UK
Raisin UK provides a free savings platform where you can apply to open savings accounts with over 30 banks and building societies. Enjoy competitive interest rates from FSCS-protected banks.
Are my savings safe with Raisin?
Your savings are safe with Raisin as it is authorised and regulated by the Financial Conduct Authority (FCA), and only works with banks that are protected by the Financial Services Compensation Scheme (FSCS) or the European equivalent scheme, so your money should be fully protected.
The FSCS is the UK’s financial compensation service that steps in when financial institutions fail and are unable to pay customers’ claims. It’s worth noting that you will only be covered for £85,000 of savings held with a single institution, so if you have two accounts with the same bank, or accounts with two different banks that are owned by the same institution which together hold more than £85,000, you won’t get the full amount back.
With this in mind, if you choose to open a savings account with Raisin, it’s important to consider where your other funds are held to ensure you’re protected. You may need to move some of your money so that you don’t have more than £85,000 held with the same institution.
Top 5 Easy Access accounts
by Raisin UK
Interest (AER): 4.87%
Interest on £5,000:
+£247
Guarantee:
£85,000
Interest (AER): 4.80%
Interest on £5,000:
+£243
Guarantee:
£85,000
Interest (AER): 4.67%
Interest on £5,000:
+£237
Guarantee:
£85,000
Interest (AER): 4.46%
Interest on £5,000:
+£226
Guarantee:
£85,000
Interest (AER): 4.39%
Interest on £5,000:
+£223
Guarantee:
£85,000
Finally…
Tracking down the best interest rates doesn’t have to be painful or time-consuming if you use a savings marketplace, so if you think your savings provider is paying you paltry returns, it’s time to vote with your feet.
Settling for low rates is likely to leave you considerably worse off over the long term, so start seeking out the best returns as soon as possible. Once you’re earning more competitive savings rates, you’ll be able to sit back and relax in the knowledge that you’re on your way towards meeting your financial goals sooner rather than later.
