While (cash) Stocks Last

If you're considering a high-interest savings account, you may want to act quickly. There's talk that UK interest rates have reached their highest point, meaning attractive offers might not last long.

Recently, accounts with over 6% returns have been available, but these high rates are already disappearing. For example, National Savings & Investments was offering 6.2% on guaranteed bonds, but that deal is no longer on the table.

We are likely to see even more fixed-rate bonds being taken off the market if their quotas fill up, especially if the base interest rate has already peaked earlier—and lower—than anticipated.

In this article, I'll highlight some of the top savings accounts you should consider if you have extra cash to invest. I'll aim to keep this article updated to serve as a reliable reference for you.

Note that the accounts mentioned here are for deposits not held in ISAs.

Information on tax and savings protection is provided at the end of the article.

Figures correct as at 25 Oct. 23

Regular Savings Accounts

A savings account is a type of account with a bank or building society in which you deposit money on a regular basis to earn a return through interest. The amount of interest you earn varies depending on the kind of savings account you choose. There may be also be limits to how often you can withdraw money from the account.

For example, Nationwide's Flex Regular Saver offers an impressive 8% interest rate, but it's only available to Nationwide current account holders.

First Direct also has an appealing Regular Saver Account that pays 7% and is exclusive to their current account customers.

There are also good options for children's savings accounts, but be cautious. Some require a minimum balance before they'll pay out any interest, on top of the regular savings contributions you'll need to make.

Most banks offer some version of these accounts, so it's worth checking with your own bank to see what they currently have available.

Easy Access Monthly Interest

An easy access savings account lets you withdraw your money whenever you want without facing any penalties. These accounts usually pay interest on a monthly or annual basis. Below, you'll find some of the best options for accounts that pay interest monthly:

• Paragon Bank – 5.25%

• Shawbrook Bank – 5.11%

• Aldermore – 4.9%

One Year Fixed

These accounts pay interest at the end of the term. You can typically access the capital during the term with loss of interest. Some banks will restrict access until the end of the term. Current 1 year fixed rates include:

• Ikano Bank – 5.86%

• Investec Bank – 5.8%

• Ford Money – 5.75%

• Aldermore – 5.61%

• Starling Bank – 5.53%

Long-Term Deposits: A Changing Landscape

Usually, the longer you commit your deposit, the higher the interest rate you'll receive. However, with falling interest rates expected, some providers are offering roughly the same rates for longer-term deposits as they are for one-year fixed terms. For instance, Ikano's three-year fixed rate is 5.46%, which is actually lower than its one-year rate of 5.86%.

If you're looking to make an eco-friendly impact with your savings, NS&I’s Green Savings online-only bonds are worth considering. They offer a three-year fixed rate of 5.7%. These bonds are backed by the Treasury, guaranteeing 100% of your investment and funding government-selected environmental projects.

Remember the Tax Implications

Interest earned from savings accounts is paid gross, but it's not tax-free. However, you might qualify for the Personal Savings Allowance, which allows most people to earn a certain amount of interest tax-free.

For basic rate taxpayers

You can earn up to £1,000 in interest from your savings accounts without having to pay tax on it.

For higher rate taxpayers

You're entitled to a £500 tax-free interest allowance on your savings accounts.

What Protection is Available for My Savings?

If your savings provider goes under, the Financial Services Compensation Scheme (FSCS) offers protection up to £85,000 per person, per institution. Joint accounts receive protection up to £170,000.

It's worth noting that if you have accounts with multiple providers, you could have even more protection. However, some institutions, like HSBC and First Direct, share licences. In such cases, you'd only receive £85,000 in total protection across both providers.