Your Money, Optimised: UK's Top Savings Accounts

The most important part of our review process is the core product itself. We compare the key products offered by different banks and other financial institutions to recommend the best product for your needs.

While checking the features of your savings product, consider the following:

Some financial institutions offer additional features and perks. We take these into account when comparing products, ensuring you can make the most of your savings.

High charges on an account can make it less suitable for your needs. However, the right bank for you may be able to offer a more comprehensive service because of the management fees it charges.

If you need to get in touch with your provider, good customer support is key. We consider customer reviews before recommending a product, to make sure your provider will be on hand if you need them.

All the financial products and services recommended by Moneyzine are regulated by the Financial Conduct Authority in the UK. You can check the company on the Financial Services Register and find out exactly what they are authorised to offer, so you can trust them with your finances.

Savings accounts have a simple purpose — they let people store and grow their money worry-free. Unlike stashing the cash in a shoebox under your bed, putting the surplus in a bank account is safe and convenient. On top of that, banks and financial institutions will pay you interest on your balance.

We’ll explain interest rates in more detail below, but the gist is that the bank pays you for using the money while it stays with them. Of course, the annual percentage yield (APY) varies depending on the institution and the amount of money in your savings account.

In most cases, clients can deposit additional funds at any moment. Yet, withdrawing the money can be tricky because some types of accounts have restrictions and penalties for early withdrawals. Nowadays, UK savers can transfer money in and out of their savings accounts via,

• bank websites,

• mobile apps,

• physical branches,

• ATMs.

Since UK banks offer mobile banking apps and online portals for monitoring your savings, money management is typically effortless and hassle-free. Linking your savings plan with a current account will let you transfer excess cash within seconds, allowing you to harvest interest on unneeded funds.

How Do Interest Rates Work?

Interest on a savings account refers to the amount of money a financial institution pays a depositor for keeping their savings in the bank. However, interest rates, expressed in percentage points, fluctuate since they depend on external economic factors.

The benchmark for interests across the UK, the Bank of England base rate, dictates the tempo. Savings providers use the base as a reference point, and an upward trajectory is good news for savers.

For example, the Bank of England base rate grew from 0.1% in December 2021 to 4.25% in March 2023. Consequently, the average interest rates increased significantly (even though most providers failed to reflect the dramatic increase in the Bank of England base rate).

Essentially, the longer you keep the money in the bank, the higher the interest rate. However, account providers might pay higher initial rates for some savings plans as a part of the switching incentive.

So, the key is to monitor the changes in interest rates and read the fine print before putting your name on the dotted line. Here's how average rates changed over the years:

(Source: Moneyfacts)

Accessibility Terms

Fund availability differs between savings accounts, so it’s vital to learn about accessibility terms before locking away your funds. The banks frown upon frequent transactions, but there are ways to access your money when needed.

For instance, instant-access savings accounts are flexible and will let you dip into the savings from time to time. This means that you’ll incur no penalties for withdrawals.

On the other hand, notice accounts and high-interest saving plans require contacting the bank before taking the money out. Early withdrawals can trigger penalties, or you could lose interest rates on the savings.

Common Charges Associated With Saving Accounts

Although most UK banks don’t charge for opening and maintaining a savings account, savers could expect some expenses while dealing with the bank.

For instance, cash withdrawals in a foreign currency will incur a fee, and NatWest will charge £1.38 for withdrawing £50 in the EU or the rest of the world.

In addition, savers could face overdraft fees if the bank offers this option. For example, Santander will charge £3.27 for £500 overdrawn for seven days.

The amount of money you should be saving each month depends on your income and financial circumstances. The key thing to keep in mind is that a large portion of your income will be destined for essentials, such as housing, groceries, and bills.

The 50, 30, 20 Rule

The 50, 30, 20 rule lays the groundwork for approximately how much you should be saving based on your income. Based on this model, 50% of your income should be spent on essentials, and 30% should be spent on your lifestyle expenditure, leaving 20% for your savings.

Read our saving strategies article for more information on the 50, 30, 20 rule and other clever ways to save money.

The minimum deposit is defined as the minimum amount that must be paid into a savings account for it to be eligible under the Terms and Conditions. Usually, this amount will only be required to open the account and start saving.

However, some savings accounts require a regular direct debit payment to remain open. Make sure you check these requirements before making a decision.

There are a few differences between saving and investing, even if the end goal may be the same. The main differences include risk, potential returns, recommended terms, and liquidity of assets.

Gross interest is the amount of interest you’ll receive on your savings before tax has been deducted. Net interest is the amount of interest you’ll receive after tax has been deducted.

Like any other income, interest received on your savings is normally taxable.

What Is the Personal Savings Allowance?

Personal Savings Allowance is termed as the total amount of interest that you earn across all of your bank accounts (except ISAs) each year, tax-free.

Basic rate taxpayers can receive up to £1,000 in interest tax-free over a given tax year.

Higher rate taxpayers have this amount reduced to £500, while additional rate taxpayers have no Personal Savings Allowance, so are taxed on all interest earned on their accounts. If your interest exceeds the amount permitted under the Personal Savings Allowance, you need to note this on your self-assessment tax return.

To put this into context, on an account with an interest rate of 5%, you’d need to save £20,000 into the account for the year to earn £1,000 in interest.

Comparing savings accounts carefully is vital to ensure you get the best deal. There are lots of different savings accounts available with different benefits and criteria.

Thus, it’s a good idea to properly research what each account offers such as interest rates, additional features and perks, charges and withdrawal limits, customer support, and rules & regulations to protect your savings.

Individual Savings Accounts (ISAs) offer a tax-free alternative to savings. The Personal Savings Allowance permits you to earn up to £1,000 in interest tax-free, but ISAs allow you to save up to £20,000 a year without paying any tax on interest or dividends earned.

Read our full ISA guide.

Savings Accounts vs ISAs

The main difference between savings accounts and ISAs is that any interest earned on an ISA is tax-free, but the savings limit is also important, particularly if you’re a basic rate taxpayer.

The Personal Savings Allowance permits basic rate taxpayers to earn £1,000 in interest a year, tax-free. In order to earn above this amount in an ISA, the interest rate need to be higher than 5%.

ISAs are therefore most tax efficient if you’ve already reached your Personal Savings Allowance elsewhere, or you save the maximum amount in an account with an interest rate above 5%.

You should also consider withdrawals, as any withdrawals you make from an ISA still count towards your annual deposit limit. Frequently withdrawing from an ISA is therefore not ideal when compared with easy-access savings accounts.

Children’s savings accounts are useful for your child’s future and encourage them to do the same. With a children’s savings account, the child owns the funds, but the child's parent or guardian has exclusive control over the account, usually until the child turns 7.

Types of Children’s Savings Account

• Children’s easy access savings

• Children’s limited access savings

• Children’s fixed term savings

• Junior ISA

Joint savings accounts are similar to savings accounts with the exception that two or more people have control over the account. This means both holders have the right to deposit and withdraw money from the account.

A current account-linked savings product is a savings account directly linked to a current account with the same provider. These are often created as a means of rewarding loyalty to a financial institution by offering higher interest rates.

As the name suggests, these accounts can only be opened if you have a current account with the financial institution. There may also be additional conditions and caveats, such as maintenance of the minimum balance, a requirement to have had it open for a certain amount of time, or making it your ‘main’ account.

These savings accounts are beneficial if they’re offered by your current provider. However, if a rival company is offering a savings account with better rates, there could also be switching rewards for changing your current account.

Is Money Held in High Interest Savings Accounts Safe?

Your savings are shielded from market fluctuations as you’ve not invested anywhere in the stock market; your bank or financial institution is simply paying you to keep your money in their account.

In terms of financial security, most firms in the UK provide protection under the Financial Services Compensation Scheme (FSCS). The FSCS will compensate you for any funds lost if your financial institution goes into insolvency, up to the value of £85,000.

How Do You Open a High-Interest Savings Account?

You can open a high-interest savings account directly with the institution offering it, provided that you meet the criteria. A lot of banks offer high-interest online-only bank accounts, so these need to be set up via online or mobile banking rather than by phone or in the branch.

Specialist savings accounts offer specific ways of saving for those looking for something specific. Some of the best specialist savings accounts are listed below.

Ethical Savings Accounts

Ethical banks use business models, that leave no negative impact on the environment or society, while some ethical banks also attempt to actively have a positive impact on society.

Almost all ethical banks refuse to lend to industries like tobacco or weapons manufacturers, and some have a proactive attitude towards lending, such as investing in renewable energy.

Best Ethical Bank

	Name	Score	Visit	Disclaimer
	Starling Bank	8.5	Visitstarlingbank.com

Starling prides itself on avoiding the funding of fossil fuels, mining, arms, and military. Instead of these, it invests in government securities and other high-quality assets.

The bank is also a founder member of the TechZero taskforce, which is a small group of UK-based technology companies working towards climate crisis.

Savings Tracker Accounts

A savings tracker account is an account whose interest rate tracks the base rate of the Bank of England. The interest rates rise as the base rate increases and vice versa. These accounts will either offer the exact base rate of interest on your savings, or a fixed amount above or below the base rate.

Remember that some banks offer savings accounts at much higher interest rates than the base rate, so this doesn’t necessarily mean a savings tracker will give you the highest returns. However, it will give you an idea of how much interest you may earn if you follow the Bank of England’s base rate.

Best Savings Tracker Account

	Name	Score	Visit	Disclaimer
	United Trust Bank	7.2	Visitwww.utbank.co.uk/

180 Day Notice Base Rate Tracker

The UTB Base Rate Tracker account tracks the base rate of interest and matches it for your savings. It has a minimum opening deposit of £5,000 and a maximum deposit limit of £1m with interest paid annually.

Postal & Telephone Savings Accounts

If you like to manage your accounts by telephone or post, several banks offer postal and telephone banking services, including savings accounts.

Charity Savings Accounts

Charities need bank accounts to manage their funds. A charitable organisation can set up a savings account for any surplus donations to help earn additional money before it needs to be spent.

Crypto Savings Accounts

Investors in cryptocurrency can deposit their tokens into a specialist savings account and earn interest. Like other currencies, the tokens will earn interest as long as they remain in the crypto savings account.

Offshore Savings Accounts

As the name suggests, offshore savings accounts are held in countries other than the native place of residence. These are often offered as fixed rate, notice, or easy access accounts.

Opening an offshore account can be difficult but it offers tax advantages to saving in an offshore account. They typically require high initial deposits, and high fees, and aren’t protected by the FSCS.

Best Overseas Savings Account

	Name	Score	Visit	Disclaimer
	HSBC	6.8	Visitwww.hsbc.com/

The HSBC Fixed Rate Saver is a fixed-rate offshore account that pays monthly interest. The minimum starting deposit is on the low side for offshore accounts at only £2,000, and the maximum amount that can be deposited is £1m. A higher interest rate is offered at different deposit levels; £2,000, £50,000, and £250,000. This account is only available when you have an HSBC current account.

Yes, you can open a savings account for your business. The three main types of business savings accounts available are:

• Business easy access account

• Business notice account

• Business fixed rate bond

Find the best business savings accounts

• Emergency funds

• Unforeseen expenses

• Saving for small purchases

• Temporary savings to earn interest while finding the best long-term strategy

• Family holiday

• Save regularly

• Earn high interest on smaller amounts

• Save without thinking about round-ups

• Family holiday

• Large purchases

• Long-term savings

• Earning interest on a financial windfall

• Family holiday*

*You need to time this perfectly, so beware of not having the funds accessible when you need them.

• Tax-free saving

• Purchasing a house

• Saving for retirement

• Saving for your children’s future

• Encouraging your children to save for a long-term goal

• Encouraging your children to save

• Introducing financial discipline

The criteria for ranking and reviewing savings accounts help us separate the best from the rest. Yet, the abundance of options complicates matters and makes the process challenging.

The modern banking industry offers dozens of attractive instruments for saving money and earning interest. Here are the most-used types of savings accounts in the UK:

This depends on how much you’d like to save, the returns you’d expect, how accessible you’d like your money to be, and your attitude to risk. Apart from saving, you may also look to build your wealth through investments.

Read our top investment guides.

Usually, UK savings providers only create accounts for UK residents, but some online-only banks, like Starling and Revolut, accept non-UK residents as well. For this, you need to have been a UK resident for at least 3 years to be able to open a Cash ISA.

Best Accounts for Non-UK Residents, Expats, and International Students

• If you'd like more options, we also list the best basic bank accounts, bank accounts for the self-employed, and bank accounts for students in the UK.

• Opening a savings account is simple.

• Savings accounts don’t carry the risk of losing money as investments do. You are guaranteed to get at least your original deposit when you withdraw.

• Seeing your savings grow over time can encourage you to keep money saved for longer and reduce your spending.

• All UK savings accounts are protected by the FSCS, so even if your chosen provider goes bust, you’re still guaranteed to get your money back, up to a total of £85,000.

• Over time, savings accounts are likely to be outpaced by inflation, so your savings will have less spending power in the long term.

• If you choose a fixed-term account, you may earn less than the market rate if interest rates rise.

• Variable interest rates mean you won’t be able to guarantee how much interest you’ll receive on your account if market rates change.

• Some financial institutions ask you to meet certain criteria to get benefit from the best interest rates.

Inflation can impact the overall spending power of your savings, as the money you’ve saved over time will have less spending power against the increase in prices.

Annual Equivalent Rate (AER) is the actual interest rate an account may provide after interest earned has been compounded. This is essentially an interest earned on the interest you’ve already received and paid into your account.

Compounding can make a big difference to your savings total, so remember to keep an eye on the AER of a savings account.

This is the Bank of England's base rate of interest. The BOE may change the interest rate for various reasons, and not all bank accounts will track it.

The FCA is the Financial Conduct Authority which regulates financial service firms and financial markets in the UK to raise standards, prevent harm, and ensure they are complying with financial law. All financial providers recommended at Moneyzine are FCA-regulated, and you can find them on the FCA register of regulated firms.

A fixed-rate savings account requires you to keep your money locked for a set period of time in order to benefit from the interest rate. This allows you to calculate exactly how much money you should receive when you withdraw.

Gross interest is the amount of interest you receive on your savings before tax has been deducted. Savings accounts pay your interest gross, so if you exceed your Personal Savings Allowance, you need to file these on your tax return.

Maturity refers to the point when a fixed-term savings account has reached the end of its term and can be withdrawn. The length of the term depends on the account, and there may be other criteria with some accounts like the Junior Cash ISA and the Lifetime ISA.

Variable rate refers to an interest rate that isn’t fixed. The financial institution sets the interest rate and is subject to change at any time. Some rates track the base rate of interest, while others do not.

Variable interest rates may rise or fall, depending on external factors. It’s worth keeping an eye on competitors’ rates to make sure you’re getting the best deal.