The best UK savings accounts with above-inflation rates

Faced with the cost of living crisis, British households are looking for any way to boost their cash flow, and savings accounts could help.

After years of low interest rates, high-yield savings accounts are enjoying a new lease of life as the Bank of England has kept rates at a 16-year high of 5.25%. While homeowners face higher mortgages, there is also a silver lining to the higher cost of borrowing as consumers can now find UK savings accounts that offer more than inflation.

According to figures from the Office for National Statistics (ONS), inflation in the UK was 3.2% in March, the lowest level since September 2021.

Savers should definitely compare offers to find the best conditions and check the applicable interest rate, otherwise they may still be stuck with a product that does not have inflation under control.

The most important factor to consider when choosing a savings account is the difference between anytime access and fixed deposits.

In short, easy-to-access accounts give you access to your money when you need it. Fixed deposits, as the name suggests, are accounts where you cannot access your money during the term of the contract. They usually offer better interest rates, but you have to cope with the idea of ​​not touching your savings for a long period of time, usually between one and five years.

What are the best high interest fixed rate accounts?

The best fixed interest account currently offers 5.25 percent and is available from Atom Bank.

The six-month fixed deposit offer requires a minimum of £50 and you can invest up to £100,000. Withdrawals are not permitted during the term of the offer.

Zenith Bank UK offers 5.18% but has higher entry requirements. The fixed deposit account requires a minimum of £1,000, which is locked for one year.

Smart Save offers a 1-year fixed rate offer, also at 5.18%, but requires a minimum of £1,000. You can invest up to £85,000.00. Withdrawals are not permitted during the term of the offer.

Online banks typically offer higher interest rates than traditional branches, which translates into better returns and provides you with a more efficient way to save and reach your financial goals.

If you prefer to choose a well-known name, the major lenders will offer you slightly lower deals, but still above the rate of inflation.

Barclays (BARC.L) offers the highest interest rate among branch banks. Its one-year fixed-rate savings account pays 4.65%. The requirements are not too strict, with a minimum balance of £500.

Read more: Bank of England maintains key interest rates but hints at cut in summer

Metro Bank is not far behind, with an interest rate of 4.61% and similar terms. The account has a fixed term of one year and the minimum deposit amount is £500.

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Lloyds (LLOY.L) offers a fixed rate savings product at 4.35% for one year. However, the minimum deposit is £3,000 and you must have or open a current account with Lloyds or another savings account to be eligible. For new customers, the interest rate is 4.15%.

How does a fixed-interest savings account work?

Unlike easy-access savings accounts where interest rates can vary, fixed-rate accounts do what their name suggests. You get a fixed interest rate for the period you choose, whether it's six months or one, two, three or even five years. These are the most common offers, but some run for up to 10 years or more.

However, you must leave your original deposit for a set period of time and not make any withdrawals. If you touch your money, you will lose all interest.

What are the best easily accessible savings accounts?

Easy access savings accounts are simple types of savings accounts where you can withdraw your money without notice.

However, with this easy access comes lower interest rates, but they are a good option for those who think they may need their money quickly.

Note that the interest rates on these accounts are variable, meaning they can rise or fall. You will be notified in advance of any change.

Oxbury currently offers the highest easy access account offer: 5.02% if you have £20,000 available to open the account.

Monument Bank pays 5.01% with an easy-to-access account that pays you interest when it matures. The account is opened via mobile banking and a minimum deposit of £25,000 is required.

Close Brothers pays 5% but requires £10,000 to open. Interest is paid annually and you can deposit up to $1,000,000.

There are easily accessible accounts with even higher interest rates, but these are not for new customers. Santander (BNC.L) Edge Saver, for example, offers 7%, but is only for current account holders.

Skipton Building Society is paying 5.5%, but again this offer is only available to mortgage holders or those who had a savings account with the lender before January.

What are the best termination savings accounts?

If you can't decide whether you would rather put your money aside and not touch it for a long time or access it at any time, then you might want to consider a termination savings account.

With cancellation savings accounts, you must cancel your account with your savings provider before you can withdraw your money.

It's ideal for those who know when they might need their cash but don't want to be tempted to use it right away.

You must give the bank or building society a certain amount of time before you can withdraw your money – usually between 30 and 120 days.

Read more: Britain emerges from recession, economy grows

Investec (INVP.L) has a 90-day notice account that pays 5.25% after the three months

This means that as long as you give the lender around three months' notice, you can access your money without penalty fees. You'll need between £5,000 and £250,000 to apply.

Hinckley and Rugby Building Society pays 5.25% on a 180-day notice account. The minimum investment is £2,500 and interest is paid monthly or annually.

United Trust Bank also offers 5.25% on a 180-day notice account, but you will need a minimum of £5,000.

The interest rate on termination accounts is variable, which means it can rise or fall over time.

What are the best savings accounts?

Those who want to make the most of their cash savings can earn returns of up to 7% with traditional savings accounts.

With most conventional savings accounts, you have to put money aside every month and receive interest annually. It is also not uncommon for the offer to be reserved only for existing customers.

For existing customers, First Direct offers 7% for a year and allows a maximum monthly deposit of £300. You cannot miss any months and a minimum of £25 must be deposited into the account each month.

Withdrawals are not possible without penalty and if you close the account before the 12 months are up, the interest rate drops to 2%.

The Co-op Bank is offering a 7% deal to existing customers. With a one-year fixed rate, you can save up to £250 a month and skip months without penalty fees.

Nationwide used to have a market-leading offer of 8%, but this has now dropped to 6.5%. Nationwide's offer is a standard savings account, available exclusively to current account customers.

For all offers listed above, you can simply open an account to access the offer.

Skipton Building Society is offering 7%, but this is limited to customers who joined before January 2024.

Coventry Building Society has an offer of 6.75%, but again only for those who have been members since January 2023.

All transactions mentioned here are covered by the Financial Services Compensation Scheme, so you are protected up to £85,000.

Attention: Normal savings account pays 6.75% to “loyal” members of the building society

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