Where to earn most interest on your cash

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Looking for somewhere to stash your cash? Here are the latest top rates.

One in four people want some advice on where to put their savings, according to recent research by Yorkshire Building Society. While we can't advise you where you should put your money, we can certainly show you your options if you want to save in cash.

Sadly, savings interest rates still remain low, thanks mainly to a combination of a low Bank of England base rate and cheap money available to banks and building societies via the Funding for Lending scheme. However, with the Funding for Lending scheme now being diverted to small businesses, savings rates might slowly start to rise as institutions need deposits again to fund mortgages.

But right now it's actually worth looking beyond high street savings accounts.

Let's have a look at the top rates across a number of different products.

Instant access savings accounts

No instant access account comes close to beating inflation, currently 2.1%.

Currently the best you can get on your cash is the 1.60% on offer from Coventry Building Society's Online Saver, although there's no bonus to monitor and you can open it with a minimum deposit of just £1.

Notice savings accounts

By giving up access to your cash for 120 days you can get a rate of 1.86% from Secure Trust Bank. You can open the account with £1,000.

Cash ISAs

For tax-free savings, if you want instant access then the Post Office's Premier Cash ISA pays 1.80% on balances above £100.

If you can cope with giving 120 days' notice to get your cash, then you can get 1.81% from the Islamic Bank of Britain. This is a Sharia-compliant account and so, in line with Sharia law, it pays an anticipated profit rate rather than an interest rate.

Moving onto fixed rates, and there's 1.90% on offer from Bath Building Society if you lock your money away for a year. You can get 2.25% from the Post Office for a two-year fixed rate with £500.

Virgin Money and Principality Building Society share the three-year top spot with a rate of 2.40%, although you only need £1 to open the Virgin account. You can get a three-and-a-half-year rate of 2.75% from Coventry Building Society so long as you put your entire year's allowance of £5,760 in it.

Over five years, the top rate is 3.05% and comes from Principality Building Society.

Fixed rate savings accounts

If you can afford to lock your cash up for a year, the best rate on offer is 1.95% from Shawbrook Bank. You need £5,000 to open the account.

Over 18 months there's a tiny improvement on the rate – you can earn 2.02% from the Islamic Bank of Britain with £1,000. Note again that this is a Sharia-compliant account so the rate is an anticipated profit rate rather than an interest rate.

For a two-year fixed rate you can get 2.40%, again from Shawbrook Bank. You need a minimum £5,000 to open the account. If you have £25,000 or more, you can earn 2.50% from the Bank of London and the Middle East via its Sharia-compliant account.

Over a three-year term you can get 2.71% from Secure Trust Bank, with a minimum deposit of £1,000.

Over four years you can get 2.81% from Vanquis Bank, with a minimum deposit of £1,000, while over five years you can earn 3.25% from FirstSave, providing you have at least £5,000. If you're happy to lock your cash up for even longer then Secure Trust Bank (£1,000) offers 3.52% but you'll need to wave goodbye to your deposit for seven years!

Current accounts

A current account continues to trump all the top savings accounts at the moment, for smaller balances anyway. Nationwide's FlexDirect account pays 5% interest on balances up to £2,500 for the first 12 months. The only condition is you need to pay in at least £1,000 a month.

Meanwhile, Clydesdale and Yorkshire Banks' Current Account Direct pay 4% on balances up to £3,000 until the end of March 2015. Again, you need to deposit a minimum of £1,000 a month into the account.

If you don't want to move your money around, Santander's 123 account pays 1% on balances over £1,000, 2% on balances over £2,000 and 3% on balances from £3,000 to £20,000. You need to pay in £500 a month, and set up at least two Direct Debits. There's also a £2 a month fee on the account but you can earn cashback on some of your direct debits for household bills.

And Bank of Scotland's Classic Account with Vantage, Lloyds Bank's Classic Account with Vantage and TSB's Classic Account with Enhance both pay 3% on balances of between £3,000 and £5,000 so long as you pay in £1,000 a month. You can have up to three of each account too.

Compare current accounts

Peer-to-peer savings

Peer-to-peer websites allow you to lend money to both other people and small businesses and potentially earn a greater reward for your risk.

However, your interest isn't tax free and your money isn't protected by the Financial Services Compensation Scheme.

Funding Circle, which only lends to businesses, says it is currently paying an average net interest rate (after fees and bad debt) of 5.70% on money lent.

Zopa, which lends to individual borrowers, says it is currently paying an average of 5% over five years after fees. Meanwhile, RateSetter's five-year income account offers a fixed rate of 5.60%.

How they compare

So let's take a look at how the different options really stack up against one another.

Account

Type

Gross interest rate

Net interest rate for basic rate taxpayer

Net interest rate for higher rate taxpayer

Minimum deposit

Maximum deposit

Access

Funding Circle*

Peer-to-peer savings

5.70%

4.56%

3.42%

£20

Unlimited

Unlimited

RateSetter Income*

Five-year peer-to-peer savings

5.60%

4.48%

3.36%

£20

Unlimited

None for five years

Zopa*Five-year peer-to-peer savings5.00%4.00%3.00%£10UnlimitedNone for five years

Nationwide FlexDirect

Current account

5.00% (one year only)

4.00%

3.00%

£1

£2,500 (maximum amount interest rate is paid on)

Unlimited

Clydesdale Bank Current Account Direct

Current account

4.00% (until January 2015)

3.20%

2.40%

£1

£3,000 (maximum amount interest rate is paid on)

Unlimited

Yorkshire Bank Current Account Direct

Current account

4.00% (until January 2015)

3.20%

2.40%

£1

£3,000 (maximum amount interest rate is paid on)

Unlimited

Secure Trust Bank Fixed Rate Bond

Seven-year fixed rate bond

3.52% (until 31st December 2020)

2.82%

2.11%

£1,000

£1,000,000

None for seven years

Shawbrook Bank Five-Year Bond

Five-year fixed rate bond

3.25%

2.60%

1.95%

£5,000

£2,000,000

None for five years

Principality Building Society

Five-year fixed rate Cash ISA

3.05%

3.05%

3.05%

£500

Unlimited

None for five years

Santander 123 account

Current account

3.00%

2.40%

1.80%

£3,000

£20,000 (maximum amount interest rate is paid on)

Unlimited

Bank of Scotland Classic Account with Vantage

Current account

3.00%

2.40%

1.80%

£3,000

£5,000 (maximum amount interest rate is paid on)

Unlimited

Lloyds Bank Classic Account with Vantage

Current account

3.00%

2.40%

1.80%

£3,000

£5,000 (maximum amount interest rate is paid on)

Unlimited

TSB Classic Account with Enhance

Current account

3.00%

2.40%

1.80%

£3,000

£5,000 (maximum amount interest rate is paid on)

Unlimited

Vanquis Bank High Yield

Four-year fixed rate bond

2.91%

2.33%

1.75%

£1,000

£250,000

None for four years

Coventry Building Society Fixed Rate ISA

Three-and-a-half-year fixed rate Cash ISA

2.75%

2.75%

2.75%

£5,760

£5,760

None until 31st May 2017

Secure Trust Bank Fixed Rate Bond

Three-year fixed rate bond

2.71%

2.17%

1.63%

£1,000

£1,000,000

None for three years

Bank of London and the Middle East Sharia-compliant Fixed Term Deposit**

Two-year fixed rate bond

2.50%

2.00%

1.50%

£25,000

£2,000,000

None for two years

Virgin Money Fixed Rate Cash E-ISA

Three-year fixed rate Cash ISA

2.40%

2.40%

2.40%

£1

Unlimited

None for three years

Post Office Fixed Rate Cash ISA

Two-year fixed rate Cash ISA

2.25%

2.25%

2.25%

£500

Unlimited

None for two years

Shawbrook Bank One-Year Fixed Rate Bond

One-year fixed rate bond

1.95%

1.56%

1.17%

£5,000

£2 million

None for one year

Bath Building Society Fixed Rate ISA

One-year fixed rate Cash ISA

1.90%

1.90%

1.90%

£1

£5,760

None for one year

Secure Trust Bank 120-Day Notice Account

Notice account

1.86%

1.49%

1.12%

£1,000

Unlimited

None for 120 days

Islamic Bank of Britain Sharia-Compliant 120-Day Notice ISA**

Notice ISA

1.81%

1.81%

1.81%

£250

Unlimited

None for 120 days

Post Office Premier Cash ISA

Instant access ISA

1.80%

1.80%

1.80%

£100

Unlimited

Unlimited

Coventry Building Society Online Saver

Instant access savings account

1.60%

1.28%

0.96%

£1

£250,000

Four withdrawals a year




*Not protected by the Financial Services Compensation Scheme

**Anticipated profit rate

The account you go for will probably be determined by the amount you have to save, your attitude to risk and whether you want instant access to your money.

What's clear though is that if you want a better return on your money in the longer term, with a bit more risk in some cases, you're better off looking beyond traditional savings accounts right now.

Unfortunately, if you just want somewhere to put some money away in case of a rainy day, you're not going to be able to beat inflation unless you go for peer-to-peer savings. If you don't fancy that, you should still shop around for the best rate you can get.

Looking for somewhere to stash your money? Check the latest savings rates

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