Best cash savings accounts: where to get the top rates of interest

Clare says

This is a great rate, and even after the 12-month bonus rate of 1.50% is removed, the remaining 4.5% AER is still excellent.

You’ll need to open a Santander Edge current account to get access to this savings account though, and that comes with a price tag – £3 per month. There are other stipulations to maintaining an Edge current account, including needing to pay in at least £500 per month, so there are a few hoops to jump through.

The other main problem with this account is that there is a £4,000 maximum. Any savings over £4,000 will receive no interest at all. But if you’re only saving small amounts, or you’re willing to split larger sums between this account and another provider, it’s worth looking into.

Clare says

Cahoot’s Sunny Day account is a nice option for those looking to save no more than £3,000. For a very attractive 5.00% AER (variable) for 12 months, on up to £3,000 you’re getting an easy access account that allows you as many withdrawals as you like throughout the year.

You only need £1 to get started and can add more than the £3,000 (£2m is the max) but you’ll only get that stellar rate on £3,000. Anything over that earns zero interest – so don’t accidentally add too much.

This is a variable rate of interest though remember, so that rate isn’t locked down. It could go up or down and if it goes down, Cahoot gives a very generous 2 months’ notice, allowing you ample time to shop around for a better rate if needed.

Clare says

Choose to round up your spending to the nearest £1 and Chase will autosave the difference for you, and pay you 5.00% AER on everything you save.

You’ll need to open a Chase current account to get access to the round-up interest rate. But if you have a relatively recent smartphone or device, account opening can be done very quickly and easily. I received my bank card two working days later.

This is a good option if you’re also looking for a new digital bank account that comes with cashback (although that only applies for the first 12 months and has a maximum payout of £15 per month). Chase is also one of my top options if you’re looking for a good travel money option: you’ll get fee-free withdrawals of cash and be able to use your debit card without charges abroad.

Clare says

This is an excellent rate and Chip is a really easy-to-use, simple app. Unlike the accounts offered by Santander and Chase, you also don’t need to go through the hassle of opening up a brand new bank account to get this option. And it’s an instant access account meaning your money isn’t locked away for any period of time (as is often the case with a fixed interest account) and you’re not penalised for making withdrawals.

The downsides are that the boosted, headline rate only applies for the first 3 months. After that your rate drops by a significant 2.05% taking it down to 2.74% AER. Also don’t forget that this is a variable tracker account, meaning that the interest rate it’s tied to the Bank of England base rate (in fact it tracks 1.29% underneath it) so if the Bank of England rises or lowers interest rates, your Chip interest rate will also be adjusted.

This rate is also only available to new customers, which Chip defines as “someone who has never previously transacted in a Chip account”.

Clare says

You can save up to £1 million into an Oxbury Bank savings account and get a 4.51% AER interest rate. You won’t be able to get instant access to your funds with this account, however, so it’s not the ideal place to hold an emergency fund.

Also, remember that this is a tracker account: that means it can go up or down, depending on what announcements the Bank of England makes on the base rate. So it’s not a guaranteed rate and you need to give 90 days’ notice if you’re not happy and want to move your funds.

Clare says

Once you have a current account set up with Chase, you can also open a saver account. There is no minimum, and you can save up to £3 million in one of these accounts.

It currently pays 4.5% AER (variable) for 12 months (including a 2% AER fixed interest boost), and that interest is calculated daily, which is a good thing as it allows you to earn interest on your interest (what’s known as ‘compounding’) at a greater rate.

The 2% AER boost is fixed for 12 months – so even if the standard saver variable rate changes when the Bank of England lowers rates, you’ll keep earning 2% on top of whatever the new variable rate is – which provides a nice sense of certainty.

Clare says

If you have a lump sum you’re comfortable locking away for 12 months, then a fixed interest account is worth considering. You get a guaranteed rate of interest, with none of the uncertainty that comes with a variable rate.

Generally, fixed rates are much less attractive than the headline-grabbing rates you’ll see on top-paying variable accounts (because the providers can always adjust those down if they wish). But this fixed rate is not too far behind some of the leading variable accounts, making it a strong contender. But, to cash-in, you must be sure you won’t need that money during the course of the term*. And you’ll need to have it all upfront as you can’t top this account up with additional deposits once the first 14 days have passed.

*Tandem does say they may make an exception in the case of financial hardship.

Clare says

I’ve included Cash ISAs in this list because there are benefits to using an ISA which are worth looking at. You can read more about them here.

A Cash ISA is a tax-free savings account. Under UK government rules, you can pay in up to £20k every year and all interest earned is tax-free. One thing to bear in mind, however, is that annual allowance is across all ISAs, so if you intend to open up a stocks and shares ISA in the same tax year, you’ll need to spread your allowance between the two.

We’re big fans of the Plum app. It’s ideal for those who don’t think of themselves as being good with money and those just starting out with investing and saving. It’s very user-friendly, and comes with some great, free smart saving tools such as auto-round-ups.

As with all FCA-regulated cash ISA providers, Plum offers FSCS protection up to £85,000.

Clare says

A fixed rate gives you certainty, no matter what the Bank of England does to interest rates over the 12 months. Of course, the downside is that you can’t touch that money if you want to keep all the interest being offered here. (You can withdraw money from a Tembo Fixed Rate Cash ISA, but doing so will incur a charge equivalent to 90 days’ interest on the amount withdrawn.) Interest is calculated daily, which is good news for your balance, but it is only paid into your account at the end of the 12-months. So this isn’t the account for you if you think you might need that money in an emergency. Tembo does also offer an easy access Cash ISA which pays a decent 4.10% AER (variable) – making that a better option if you want the option of unlimited, penalty-free withdrawals.

However, if you know you’re not going to need to access the cash, then this fixed account is a great way to bank a decent rate of interest and, of course, you can put up to £20,000 per year into a Cash ISA with zero tax to pay on any of your earnings.