With interest rates heading slowly downward across 2025, it remains vital to ensure your money is working hard for you.
Making sure your savings account has a high rate of interest is important for two reasons: one, it earns you more cash across the year, and two, it gives you a better chance of preserving the real value of your money – which is eroded through inflation.
Given inflation remains higher than the government’s 2 per cent target – it rose to 3.5 percent in April – you should take the time to scan for the best available rates and put your money somewhere above this. The Bank of England’s base rate is currently 4.25 per cent.
There are plenty of such accounts right now so make the most of them and grow your savings, whether in a cash Isa, an easy-access account or a fixed-term deal.
Best cash Isa accounts
A cash Isa is just like any other savings account, but you don’t pay any tax on interest earned, there’s currently a £20,000 personal allowance to deposit funds in each year and some companies may have different restrictions or points to be aware of, such as bonus interest rates which last for only a few months.
The top rate in this area right now is with Moneybox, who are offering 5.46 per cent on your money – but that includes a 1.51 per cent bonus which lasts for three months. The minimum balance is £500 and you can have three withdrawals a year without impacting the rate you get.
After that, a host of places are offering a little under the 5 per cent mark.
Plum are offering 4.85 per cent for new customers which includes a bonus rate if you keep your account for a year, while Chip’s 4.82 per cent Isa drops to 4.06 per cent (variable) after 12 months.
The best non-bonus rate is from Tembo, who offer 4.8 per cent with unlimited withdrawals.
Always check rules around withdrawals before opening any Isa product to ensure it suits your needs and remember putting money into a cash Isa counts towards your overall Isa allowance, which could include stocks and shares investing accounts, Lifetime Isas or other products.
Best easy access savings accounts
If for any reason you don’t want or cannot use an Isa, an easy access account should be your next port of call if you need to be able to call upon your money at short notice.
Right now, plenty of banks and building societies are offering rates above 4.5 per cent – but again, check the terms of each account suit your expected needs.
For example, Atom Bank are offering the highest rate of 4.75 per cent, though if you make a withdrawal from the account in any given month, you’ll instead get 2.5 per cent. This is to encourage regular saving, ideal for those who need to build a safety pot or have a specific goal in mind.
Beyond that, rates are comparable between Snoop (4.6 per cent), Chip (4.56 per cent), Cahoot (4.55 per cent) and Coventry Building Society (4.5 per cent).
Most have minimum deposits to open and run the account, but this can be from £1 in some instances.
It’s also worth noting that many banks have savings accounts accessible only if you are already a current account customer – and these can be rewarding with higher interest rates of up to 7 per cent. However, you can often only save a fixed amount per month, such as £300.
Fixed term accounts
If you have money you’d like to lock away for a longer period, perhaps to avoid accessing it to spend or because you know you’ll need it on a particular date down the line, a fixed-term bond might be ideal.
The drawback, aside from no access to the cash, is that if interest rates go higher, you’ll be earning the same rate you accept – and with not much difference between fixed deals and easy access right now, you might therefore miss out.
On the other hand, if rates continue to drop, you’ll be guaranteed the fixed rate for your entire term.
Looking at 12-month bonds, Hampshire Trust Bank is leading the pack by a slight amount with their 4.45 per cent offer; interest in this type of account tends to be paid at the end of the term, with no withdrawals allowed and both minimum and maximum amounts allowed – in this case, from £1 to £250,000.
There are a shed-load of banks and building societies offering between 4.3 and 4.4 per cent, with slightly different rates depending on your deposit amount, the brand name you prefer and other terms within each account. Some include:
Rates are always subject to change but are correct at publish date. Always ensure the account is right for your needs – and most of all, make sure your money is working for you!