Best Savings Account for the UK

Are you considering putting some money aside for rainy days, or are you just looking for a savings account with the best interest rate? Either way, take a look at some of the top-rated savings accounts that you can currently invest in for a better and more secure future.

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Best Savings Accounts - UK Top Picks

1. Tandem

If you choose to invest with Tandem’s Green Instant Access Saver, you will be supporting their initiative to make UK homes more sustainable and environmentally friendly. This savings account comes with an interest rate of 0.55%, handy app access, and no fees, making it one of the most convenient ways to start setting money aside for the future. Full Review

  • 0.55% AER
  • Easy access (app-based) account
  • No fees or withdrawal limits

If you choose to invest with Tandem’s Green Instant Access Saver, you will be supporting their initiative to make UK homes more sustainable and environmentally friendly. This savings account comes with an interest rate of 0.55%, handy app access, and no fees, making it one of the most convenient ways to start setting money aside for the future. Full Review

2. OakNorth Bank

OakNorth Bank offers one of the best interest rates for notice accounts - 0.86% annual equivalent rate (AER) for its 120 days Notice Deposit Account. You can open your account with a minimum deposit of only £1 and access all your savings with 120 days advance notice. Moreover, there are no limitations on the number of withdrawals or deposits made. Full Review

  • 0.86% AER
  • 120 days notice period
  • £1 minimum opening balance

OakNorth Bank offers one of the best interest rates for notice accounts - 0.86% annual equivalent rate (AER) for its 120 days Notice Deposit Account. You can open your account with a minimum deposit of only £1 and access all your savings with 120 days advance notice. Moreover, there are no limitations on the number of withdrawals or deposits made. Full Review

3. Zopa Bank

Zopa Bank offers a simple way to watch your savings grow online at a great rate with its fixed-rate bond. This two-year fixed-term savings account offers an interest rate of 1.61% that will stay the same until the end of the fixed term. But, of course, you won’t be able to withdraw money before the end of that term. Full Review

  • 1.61% AER
  • £1,000 minimum opening balance
  • 14 days to pay in

Zopa Bank offers a simple way to watch your savings grow online at a great rate with its fixed-rate bond. This two-year fixed-term savings account offers an interest rate of 1.61% that will stay the same until the end of the fixed term. But, of course, you won’t be able to withdraw money before the end of that term. Full Review

4. Saffron Building Society

If you are interested in setting a small sum aside monthly, the Small Saver (Issue 2) savings account by Saffron Building Society is one of your best options. This regular savings account offers a 1.75% interest rate, which is fixed and won’t change during the one-year account term. You can withdraw funds from the account only once per month and must deposit a small sum, between £1 and £50, every month. Full Review

  • 1.75% AER
  • £1 minimum opening balance
  • £50 maximum allowed per month

If you are interested in setting a small sum aside monthly, the Small Saver (Issue 2) savings account by Saffron Building Society is one of your best options. This regular savings account offers a 1.75% interest rate, which is fixed and won’t change during the one-year account term. You can withdraw funds from the account only once per month and must deposit a small sum, between £1 and £50, every month. Full Review

5. Moneybox

The market-leading Cash Lifetime ISA offered by Moneybox is one of your best options if you want to save towards your first home or retirement. You can save up to £4,000 per tax year and get a 25% government bonus on top of all your savings. In addition, the Moneybox Cash Lifetime ISA offers an excellent 0.60% interest rate and includes no fees. Full Review

  • 0.60% AER
  • £1 minimum opening balance
  • 25% government bonus with each monthly deposit

The market-leading Cash Lifetime ISA offered by Moneybox is one of your best options if you want to save towards your first home or retirement. You can save up to £4,000 per tax year and get a 25% government bonus on top of all your savings. In addition, the Moneybox Cash Lifetime ISA offers an excellent 0.60% interest rate and includes no fees. Full Review

Detailed Reviews

Tandem
Tandem

Best for savers who need fast and easy access to their account

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  • No fees and withdrawal limits
  • Environmentally-friendly
  • No regular deposits required
  • Easy access and set up

UK customers are increasingly opting for green options when it comes to saving their money, and Tandem’s Green Instant Access Savings Account is a good example. The account was launched in February 2021 after a survey conducted by Tandem showed that two-thirds of Brits wanted to switch to an environmentally friendly bank.

 

The Green Instant Access Savings Account has a headline interest rate of 0.55%, handy app access, and no fees or withdrawal penalties. You can open the account with only a £1 minimum opening deposit and hold a maximum balance of up to £250,000. 

 

One of the best things about Tandem’s Green Saver Account is that it allows instant account access and unlimited withdrawals. What’s more, you can make regular or one-off payments and save however and whenever it suits you, without being obliged to make regular deposits into your account. 

In the table below, you can see what your savings will look like after 12 months, based on a deposit of £1,000, assuming no further deposits or withdrawals are made. 

 

Deposit Amount Interest Rate Account balance after 12 months
£1,000 0.55% £1,005.50

 

To become eligible for opening an account, you must:

  • Be at least 18 years old
  • Be a UK resident with a current UK address
  • Own a UK based bank account in your name

The account works alongside your current existing account for safe and easy money transfers. So, you can withdraw money only by moving it into an existing UK-based account that has been verified as yours. In addition, all deposits made into your account must come from an existing verified UK-based account as well.

The interest rate is variable, and if Tandem decides to increase it, you may be notified before or after the change goes into effect. In contrast, if the interest rate reduces, you will get a 30 days’ notice before the change occurs. 

If you are worried about the security of your savings, you will be relieved to know that Tandem is a fully-fledged bank. That means that up to £85,000 of your savings is protected by the Financial Services Compensation Scheme (FSCS).

You can also download the app and set up your account in a matter of minutes. So, even if you are not used to online banking, you will find Tadem’s simple layout extremely easy to use. Overall, this is one of the best easy-access savings accounts and one of the most convenient ways to start saving for the future.

OakNorth Bank
OakNorth Bank

Best for savers who can plan ahead

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  • One of the highest interest rates for notice accounts
  • No minimum opening deposit
  • No withdrawal limits
  • No deposit limits

OakNorth Bank currently offers one of the best interest rates of 0.86% on its 120 Days Notice Deposit Account. In addition, you can open your account with a minimum deposit of only £1, while the maximum deposit you can pay in any OakNorth Bank account is £500,000. 

This is a notice savings account that requires you to inform the bank 120 days before making any fund withdrawals. Still, there are no limitations on the number of withdrawals and no charges for withdrawals made. Moreover, the funds will be credited back into your nominated bank account the next business day after the notice period has passed. 

There are no limitations on the number of deposits made either. That means you can transfer funds to your account anytime through your nominated bank account until you have reached the maximum account balance of £500,000.

Interest is calculated based on the minimum daily balance and paid gross on the first day of every subsequent month. In addition, the interest rate is variable and subject to change. If OakNorth Bank decides to decrease it, you will be notified at least 14 business days before the change takes effect.

So, let’s assume the interest rate stays at 0.86%. In that case, the estimated account balance after 12 months based on a £1,000 deposit would be £1,008.60. Of course, this calculation assumes that interest is paid to the account monthly and that no further deposits or withdrawals have been made during the 12 months. 

This account is available to all individuals over the age of 18 who are UK residents and have a personal bank or building society account.  Once you have set up your account and activated online banking, you can manage it through OakNorth Bank’s mobile app or website. 

It is also worth mentioning that it is not possible to withdraw money from a notice account until the mandatory notice period has passed. Still, OakNorth Bank may allow it in exceptional circumstances, such as terminal illness, bankruptcy, or insolvency. 

OakNorth is also a highly reliable and secure bank, and up to £85,000 of your funds will be protected by the Financial Services Compensation Scheme.

Zopa Bank
Zopa Bank

Best for savers with a lump sum to invest

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  • Fixed-rate account
  • Quick online application
  • Excellent interest rate
  • Online account management

If you are willing to tie up your savings for two years, then one of the best options currently available is Zopa Bank’s two-year fixed-rate bond. It comes with a market-leading interest rate of 1.61%, which is fixed and will remain the same until the end of the fixed term. 

The interest rate is calculated daily and is paid into your account once per month. 

The minimum amount that you must deposit to open your savings account is £1,000. Zopa Bank gives you a 14-day period after you’ve opened the account to make the initial deposit. 

A fixed-rate bond pays a guaranteed amount of interest, so it is the most secure way to invest a lump sum of money that you can afford to lock away. However, once you have made your initial deposit, you will not be allowed to make any further deposits. 

The maximum total amount that you can deposit at the time of opening your account is £250,000. In the table below, you can see the amount of money you will have in your account after 24 months, based on a £1,000 deposit.

 

Deposit Amount Balance at the end of fixed-term
£1,000 £1,032.45

 

These calculations are made assuming that your interest was added to your balance and that no further deposits or withdrawals were made from the account.

You can’t withdraw money from a fixed-rate bond before the end of the term. However, if in exceptional circumstances you want to make any early withdrawals, you will only be paid the interest earned up to the withdrawal date. 

To open a fixed-rate bond with Zopa Bank, you must be an individual aged over 18, have a UK tax residency, and own an active UK bank account. 

Finally, once your account reaches maturity, your funds will be transferred to a Savings Holding account. This account will temporarily hold your money until you decide whether you want to transfer it to your bank account or a new Zopa product.

Also, your deposits with Zopa Bank are protected up to £85,000 by the Financial Services Compensation Scheme.

Saffron Building Society
Saffron Building Society

Best for savers who want to set money aside monthly

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  • The flexibility of monthly withdrawal
  • No minimum opening deposit
  • Excellent interest rate
  • Savings management remotely or in branch

If you don’t have a large sum to invest, a regular savings account might be the best option for you. These accounts allow individuals to save money by setting aside a regular amount each month and are a great way to build up a savings habit.

Saffron Building Society offers one of the best interest rates on the market right now with its Small Saver (Issue 2) account. This regular savings account comes with an interest rate of 1.75%, which is fixed and won’t change during the 12-month account term. 

You can open the account with a minimum opening deposit of £1, while the maximum deposited amount per calendar month is £50. You cannot make any deposits that are higher than that. To keep the account active, you must deposit between £1 and £50 once every month. 

You can also withdraw funds from the account only once every month. Further withdrawals are not allowed and will result in the account being closed. If you are an online account holder, you can withdraw funds electronically directly to your nominated bank account. 

So let’s assume you deposited the maximum amount of £50 each calendar month and that you have made no withdrawals during the account term. Here is what your savings would look like after 12 months. 

 

Maximum monthly deposit Interest Rate Account balance after 12 months
£50 1.75% £605.69

 

Here are the requirements to become eligible to open this account

  • Be aged 16 or over and have a UK residentship
  • Only hold one Small Saver or Regular Saver account with Saffron Building Society at a time
  • Provide a valid email address and phone number
  • Have a current UK based account held with another bank or building society that will be used as your Nominated Bank Account
  • Make monthly deposits between £1 and £50

Similar to the savings accounts previously mentioned, up to £85,000 of your deposits with Saffron Building Society will be protected by the Financial Services Compensation Scheme.

Moneybox
Moneybox

Best for savers who do not want to pay tax on the interest earned

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  • No fees
  • Tax-free interest
  • First-year introductory bonus
  • 25% government bonus

A Cash Lifetime ISA is a government product designed to help people between 18-39 buy their first home or save towards retirement. 

The Moneybox Cash Lifetime ISA offers an interest rate of 0.60%. This interest rate consists of a 0.25% base rate, which is variable, and a fixed introductory bonus rate of 0.35% that only applies during the first year.

As with any other Lifetime ISA, you can put in up to £4,000 each tax year, and the government will add a 25% bonus of the sum you’ve contributed. The bonus will be paid directly to your Lifetime ISA within 54 days of your contribution. 

So, if you make the maximum £4,000 deposit per year, that totals an additional £1,000 from the government each year. 

What makes Cash ISA’s one of the best savings accounts is that interest is paid tax-free, which means you will not have to pay any income tax on the interest earned. There are also no fees with this account. 

In the table below, you can see what your estimated balance would be after 12 and 24 months based on a £1,000 deposit, with the government bonus included.

 

Deposit Estimated balance after 12 months with the 0.35% bonus rate  Estimated balance after 24 months with an interest rate of 0.25%
£1,000 £1,257.31 £1,264.88

 

However, the Moneybox Cash Lifetime ISA does come with some limitations compared to other savings accounts. For instance, it is only available to individuals aged 18-39. Also, you can’t withdraw the money for any reason other than buying your first home or retirement. 

You can also buy a house up to the value of £450,000, which you will be able to do after you’ve had the account open for at least a year.

If you need to withdraw money from your account for any reason other than those two, you’ll have to pay a government charge of 25% on the amount withdrawn. In that case, you can get less than what you initially put in. 

The Moneybox Lifetime ISA is also covered by the Financial Services Compensation Scheme, so up to £85,000 of your savings will be fully protected.

How to Choose the Best Savings Account?

– BUYER’S GUIDE –

 

The savings market offers several different types of savings accounts, so it can easily get confusing and challenging to choose the best deal for your needs. So, in this Buyer’s Guide, we will outline the main types of savings accounts and provide the main benefits and drawbacks of each of them.

Instant Access Savings Account

If you need to save money for a purchase, a holiday, or an event in the near future, then instant saving accounts are your best option. These types of accounts give you the flexibility to withdraw money whenever you need to.

In contrast, some types of savings accounts, such as fixed-rate bonds and notice savings accounts, will make accessing your funds much more difficult. 

Instant access accounts are much more straightforward and flexible. Aside from offering unlimited withdrawals, they are effortless to use, manage and set up. In addition, most of them allow you to start your savings pot from scratch and come with a minimum opening balance of just £1.

Easy access accounts also give you the freedom to add to your savings whenever you want to, with no deposit limitations. What’s more, if you plan to save for less than 12 months, it is best to choose an easy access account that pays interest monthly rather than annually. 

Tandem’s Green Instant Access Savings Account is a good example as it offers all these handy features. Moreover, it is an ethical saving account that aims to make UK homes more sustainable and environmentally friendly.

Of course, these types of accounts also have their downsides. For example, other types of savings accounts that lock your money in for a set period often come with much higher interest rates. 

So, unless you need quick and easy access to your money, a notice savings account or a fixed-rate bond may give you a much better savings interest

Notice Savings Accounts

A notice account is one where the savings provider requires advanced notice before you can make a withdrawal. 

The main advantage of Notice Savings Accounts is that they offer much better interest rates than the less-restrictive easy access and regular savings accounts. The restrictions that come with notice accounts can also suit some savers as their money will be much less accessible, making it far less likely to withdraw and spend it on a whim. 

The notice period may last from 30 to 180 days, depending on the provider, and you must wait for it to pass before you can make any withdrawals. 

As a general rule, the longer the notice period, the better interest rate you will get. So, when opening a notice account, make sure you only put away a sum of money that you can afford to keep out of reach for that long. 

If you are confident that you won’t need access to your money, then notice savings accounts are a good option and offer some of the best savings rates on the market. 

Minimum and maximum account balances typically vary depending on the savings provider. Some will even let you open your account with a minimum deposit of only £1. If you have already decided to save with a notice account, an essential aspect you will need to consider is the length of the notice period you are comfortable with. 

Ultimately, notice accounts are best for individuals who plan ahead and don’t need immediate access to their money. Locking away your emergency savings in a notice account is always a bad idea. That is because most of these accounts impose penalties for making withdrawals without the required notice.

Fixed-Rate Bonds

If you have an amount of money that you are confident you will not need for living expenses, saving it in a fixed-rate bond is one of your best options. The main advantage of fixed-rate bonds is that you can lock your money away for a set period knowing that the interest rate will stay the same during its entire term. 

Depending on the savings provider, fixed-rate savings bonds usually require you to tie up your money between six months to five years. So before deciding on the most suitable term of fixed-rate bond for you, you first need to consider how long you can go without access to your funds.

For instance, if you are not in any rush to get your savings back and expect the interest rate to stay the same, a longer-term bond is your best option. However, in all other cases, choosing a shorter-term bond is the better option. That is because if the interest rate starts rising, your savings can become stuck in an account that is no longer competitive. 

These savings products are also very restrictive but tend to offer much higher interest rates than both instant access and notice accounts. Typically, the longer the term is, the higher the interest rate available. 

When choosing a fixed-rate bond, it is also essential to look for one that pays compound interest. A compound interest gives your savings a chance to grow and snowball. The snowball effect happens when you earn every subsequent interest on both your original savings and the accumulated interest from previous periods. 

The most obvious disadvantage of fixed-rate bonds is how restrictive they are. So, if you have to make an early unplanned withdrawal, you will most likely have to pay a hefty penalty to the bank first.

Zopa Bank’s two-year fixed-rate bond pays compound interest, has an excellent interest rate of 1.61%, and provides quick and easy online access. These are only some of the reasons why it is one of the best fixed-rate bonds on the market right now. 

Regular Savings Accounts

Regular savings accounts are typically the best option for people who want to get into the savings habit by putting aside a small sum of money each month. These account types also offer some of the most favourable interest rates on the savings market. However, they do come with some requirements.

Most notably, you will have to put in a set amount of money each month. If you fail to make monthly contributions, it will result in your account being closed. So only open this account if you are confident you can make regular monthly payments. 

Typically, savings providers set a minimum and maximum amount you can pay monthly. For instance, with the Small Saver (Issue 2) regular savings account by Saffron Building Society, you can keep your account open with a minimum monthly contribution of only £1. You can also make a maximum monthly contribution of £50.

If you think you might need access to your funds before the end of the term, make sure you choose a less restrictive account that offers more flexibility. 

Many regular saving account providers don’t allow any withdrawals or might give you a lower interest rate the month you made a withdrawal. The Small Saver (Issue 2) account is more flexible in that aspect, as it allows one monthly withdrawal. 

Combined with the excellent interest rate, all these features make this one of the best regular savings accounts currently on the market. 

 

Cash Lifetime ISA

A Lifetime ISA is a tax-free savings account designed to help people between 18-39 save towards their first home or retirement. With this type of account, you can save a maximum of £4,000 each tax year, and the government will add a 25% bonus on top of your savings. 

So for every £4 you put into your account, the government will give you one extra pound, which can amount to a maximum of £1,000 of government bonus per tax year. The bonus will be added to your account each month, so you will also benefit from compound growth.

If your ultimate goal in saving with a Lifetime ISA is to purchase your first home, the property must be worth £450,000 or less. In contrast, if you plan to use the savings towards your retirement, you will not be able to withdraw the funds until you are at least 60 years old. 

However, if you are not willing to wait until you are 60 to access your savings or are not a first-time buyer, a Lifetime ISA is definitely not the right option for you. 

If you withdraw money from a Lifetime ISA and use it for anything other than your first home or retirement, you will have to pay a 25% penalty of the sum withdrawn. In that case, you can even get less than what you initially put into your account. 

One of the best tax-free savings accounts currently is the Moneybox Cash Lifetime ISA. It offers an excellent interest rate of 0.60%, including a fixed 0.35% bonus during the first year. 

 

Wrap Up

Opening a savings account is the best way to get your finances in order and keep your hard-earned money safe. Savings accounts also provide financial security and will keep you prepared for any unexpected expenses or emergencies.

So, evaluate which type of savings account is best for you and start saving toward a safer financial future right away. Reaping the rewards later in life will make saving now all worthwhile.

FAQ

Does your money grow in a savings account?

Yes, money in a savings account grows by earning interest. Savings will grow as you make more deposits, and interest accrues over time.

Are savings accounts worth it?

Yes, having a savings account is worth it. Savings accounts are a safe place to store your extra money and an excellent way to resist the temptation to spend. A savings account is also an excellent place to save money for emergencies and towards future goals. 

What are the disadvantages of a savings account?

The main disadvantage of savings accounts is that most of them come with variable interest rates. They also offer significantly lower interest rates than other types of accounts and investments. Moreover, most of them also come with minimum balance requirements and withdrawal limits. 

What is the best savings account?

The best savings account for you depends on your needs. Typically, if you need quick and easy access to your savings, an easy access account would be your best option. Alternatively, if you want to lock your money away for a set time and don’t require immediate access to your savings, a fixed rate bond or a notice account would be best. Finally, if you are saving for your first home or retirement, you should choose a Cash Lifetime ISA.