Savings rates continue to fall as thousands of providers slash their top deals. Thankfully, there are still a few decent spots to stash your cash — if you know where to look.
But before we reveal the best options, it's worth flagging up two key recent developments that should change the way you think about savings.
A new savings landscape
The first is the Personal Savings Allowance (PSA).
Launched last April, the PSA allows basic rate taxpayers to earn up to £1,000 and higher rate taxpayers to earn up to £500 in savings interest tax-free. Additional rate taxpayers do not have a PSA.
This means instant access, notice and fixed rate bonds are now far more lucrative as providers will stop taxing savings interest at the source.
The second change is the dramatic rise of current accounts as a viable home for your savings.
While banks have traditionally offered terrible rates of interest on in-credit current account balances (and many still do!), a growing number are looking to lure new customers by offering rates that beat even best buy savings accounts.
And, as they're also included in the PSA, you get the same tax benefits to boot.
Let's look at all of these and more to see what rates you can get and where the best place to put your cash is.
Instant access savings accounts
The top rate of interest on an easy access account is currently 1.10% which you can get from RCI Bank with its Freedom Savings Account. You'll need £100 to open an account.
If you give up access to your cash for 120 days you can get a rate of 1.30% from Paragon Bank, which you can open with £500.
While the PSA has effectively made all savings accounts tax-free you should still consider using your tax-free ISA allowance (currently £20,000 for 2017/18) to save.
That's because any money you put into an ISA will stay tax-free long term, even if the interest you earn grows. With the PSA the interest you earn beyond the £1,000/£500 limit is taxed at your marginal rate.
The best rate on an easy access ISA is available with Post Office Money which offers 1.01% on deposits from £100, with a 0.76% bonus for the first 12 months.
Lock your money up for a year with Al Rayan Bank and you'll get a rate of 1.15%. You'll need £1,000 to open an account.
Over two years the best Cash ISA is from Britannia which is offering a rate of 1.25% on balances from £5,000.
Bank of Cyprus is the top place to stash your cash over three years, paying a rate of 1.28%. You'll need to deposit at least £500.
Virgin Money wins out over five years, offering 1.75% with a minimum deposit of just £1.
If you decide to lock your money away, you can get higher returns.
Al Rayan Bank has the highest rate when it comes to one-year bonds at 1.61%, with a minimum deposit of £1,000.
It wins out in the two-year fixed-rate category too with a rate of 1.91% on deposits starting at £1,000.
NS&I takes the lead in the three-year bonds with a rate of 2.20% on its Investment Guaranteed Growth Bond (1). You can invest as little as £100.
You can get 2.30% on a five-year fixed-rate account from Milestone Savings from £10,000.
If you're happy to put your money away for seven years and have a decent-sized deposit, the Bank of London and the Middle East (BLME) would be right for you. Its Premier Deposit Account has a rate of 2.50% on deposits starting at £25,000.
Current accounts continue to rival the top savings accounts at the moment, at least for smaller balances.
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.
TSB's Classic Plus account pays 3% on balances of up to £1,500, providing you credit the account with £500 a month.
Lloyds Bank is offering the Club Lloyds account, which pays 2% on balances between £1 and £5,000, providing you credit the account with £1,500 a month and set up two direct debits from it.
If you don't want to spread your money around, Santander's 123 account pays 1.5% on balances of up to £20,000. You need to pay in £500 a month, and set up at least two direct debits. There's also a £5 a month fee on the account but you can earn cashback on some of your direct debits for household bills which can help cover that.
The Tesco Bank Current Account also pays 3%, but only up to £3,000. New applications were closed for a time, but the account has been brought back with some caveats. You'll need to pay in at least £750 a month and have at least three direct debits (not including Tesco Bank savings accounts).
And Bank of Scotland's Classic Account with Vantage pays 3% on balances of between £3,000 and £5,000 so long as you pay in £1,000 a month and have two direct debits set up. You can have up to three accounts too.
Just be warned that the interest on this account will change from 11 June 2017. Rather than having a tiered interest rate, there'll be a single rate of 2% on balances from £1-£5,000. It's good news if you have a smaller pot.
Where to earn the most interest on your cash
Here's a table with all the top deals for you to compare at a glance.
5% (one year only)
£1 (max: £2,500)
Tesco Bank Current Account
£1 (max: £3,000)
£1 (max: £1,500)
Bank of Scotland Classic Account with Vantage
£3,000 (max: £5,000)
BLME Premier Deposit Account
Seven-year fixed-rate bond
Milestone Savings Fixed Term Deposit
|Five-year fixed-rate bond||2.30%||£10,000|
NS&I Investment Guaranteed Growth Bond (1)
|Three-year fixed-rate bond||2.20%||£100|
Lloyds Bank Club Lloyds
£1 (max: £5,000)
Al Rayan Bank Fixed Term Deposit
Two-year fixed-rate bond
Virgin Money Fixed-Rate Cash E-ISA Issue 241
|Five-year fixed-rate Cash ISA||1.75%||£1|
Al Rayan Bank Fixed Term Deposit
One-year fixed-rate bond
|Current Account||1.50%||£3,000 (max: £20,000)|
Paragon Bank 120 Day Notice Account (Issue 6)
120-Day Notice Account
Bank of Cyprus UK Fixed Rate Cash ISA
Three-year fixed-rate Cash ISA
Britannia Fixed Rate Cash ISA - 28/06/2019
Two-year fixed-rate Cash ISA
Al Rayan Bank 12 Month Fixed Term Cash ISA
|12-month fixed-rate Cash ISA||1.15%*||£1,000|
Easy access savings account
Post Office Money Online ISA - Easy Access Issue 10***
Easy access Cash ISA
*Anticipated profit rate
**Current account charges a £5 monthly fee
*** Includes 0.76% bonus for 12 months
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.