Best savings accounts that offer above inflation rates

UK households are on the lookout for every little way to make their money go further amid the cost of living crisis, and savings accounts might help.

After years of low rates, high-yield savings accounts are having a moment as the Bank of England has kept interest rates at a 16-year high of 5.25%. While homeowners face higher mortgages, there is a silver lining in higher borrowing costs as consumers can now find UK savings accounts that offer more than inflation.

The UK rate of inflation came in at 3.4% in February, the lowest since September 2021, according to figures from the Office for National Statistics (ONS).

Savers should make sure they shop around to find the best deals and check what rate they are on — as they could still be sitting on a product that does not beat inflation.

Read more: How to make the most out of your bank and savings accounts

The main factor you should be aware of when choosing a savings account is the difference between an easy access or fixed term.

In a nutshell, easy access accounts allow you to access your money when you need it. Fixed term, as the name implies, are accounts where you can’t access your cash for the duration of the deal. They usually offer better rates but you must be comfortable with the idea of not touching your savings for a long period of time, usually between one to five years.

What are the best high-interest fixed rate accounts?

The best fixed rate account currently offers 5.18% and is available from three providers.

HTB has a 5.18% six-month fixed term deal that requires a minimum of £1 and you can invest up to £250,000. Withdrawals are not allowed for the duration of the deal.

On maturity, meaning the end of the fixed period, customers will get 5.18% on balances. For example, if you put £10,000 with them today, in six months you would get your money back plus £518 as interest.

Allica Bank also offers 5.18% but has higher entry requirements. The six-month fixed-term personal savings account requires a minimum of £10,000 that will be locked for half a year.

Beehive Money has a one-year offer that pays 5.18%. The minimum deposit is £500 and you can go as high as £250,000. No withdrawals are allowed during those 12 months.

Online banks typically offer higher rates than traditional brick-and-mortar branches, which translate into better returns, giving you a more efficient way to save and reach financial goals.

If you prefer to go with a familiar name, the high street lenders have slightly lower offers but still above inflation.

Barclays (BARC.L) offers the highest rate among high street lenders, with a one-year fixed rate savings account that pays 4.65%. The requirements are also accessible, with a minimum of £500.

Metro Bank isn’t that far off with its 4.61% interest rate and similar conditions. One-year fixed term and a minimum of £500.

Lloyds (LLOY.L) has a fixed rate savings product that offers 4.35% for one year. However, the minimum deposit is £3,000 and you must have or open a Lloyds current account or a different savings account to be eligible. For new clients the interest is 4.15%.

How do fixed rate savings account work?

Unlike easy access savings, whose interest rates can vary, fixed rate accounts do as their name suggests. They'll earn a set rate of interest for the period you choose, whether that's six months or one, two, three or even five years. Those are the most common deals but some offers go up to 10 years and over.

However, you need to have your initial deposit for a fixed period, without making withdrawals. If you do touch your money, you forfeit any interest.

What are the best easy access savings accounts?

Easy access savings accounts are simple types of savings accounts that let you withdraw your money without notice

However, with that ease of access comes lower interest rates compared to fixed rate accounts. They are a good option for those who think they might need their money in a hurry.

Be aware that rates on these accounts are variable, which means they can go up or down. You will be notified of any change ahead of time.

The Post Office currently has the highest paying easy access savings accounts offer on the market. It offers 5.06% which will be paid monthly.

This account can be opened with £1 but you can go as high as £2m. It offers unlimited, free withdrawals.

Cynergy Bank also pays 5.01% with an easy access account that will pay you interest annually. You can only open it online with £1.

Monument Bank pays 5.01% at maturity and requires a bit more money. To open the account, which you can do via mobile banking, a minimum of £25,000 is required.

There are even higher paying easy access accounts but they are not for new customers. Santander (BNC.L) Edge Saver, for instance, offers 7% but it is only for current account holders.

Skipton Building Society pays 5.5% but again the deal is only available to mortgage holders or those who had a savings account with the lender before January.

What are the best notice savings accounts?

Can’t decide on whether you want to put your money away and not touch it for a long period of time or keep it accessible at all times? Then maybe you should consider a notice savings account.

Notice savings accounts require you to give notice to your savings provider before you can withdraw your funds.

It is ideal for those who will know when they might need their cash but you don’t want the temptation of dipping into it before

You will need to give the bank or building society a set amount of advance warning before you can withdraw your money — usually between 30 and 120 days.

Investec (INVP.L) has a 90-day notice account that pays 5.25% after the three months.

This means that as long as you give the lender a roughly three-month advance warning, you can access your money with zero penalties. You need between £25,000 and £250,000 to apply.

Hinckley and Rugby building society pays 5.25% on a 180-day notice account. The minimum investment is £2,500 and interest is paid monthly or annually.

United Trust-Bank has a similar offer: 5.25% in a 180-day notice account which you can open with £5,000.

Interest rates with notice accounts are variable, which means it could go up or down over time.

What are the best regular savings accounts?

For those looking to make the most of their cash savings, regular savings accounts offer up to 7% returns.

Most regular savings accounts require you to put money away each month with interest paid yearly and it is not uncommon for the offer to be available only to current customers.

For existing customers, First Direct offers 7% for a year and allows a maximum monthly deposit of £300. You are not allowed to skip months, with a minimum of £25 required to be deposited in the account every month.

You are not allowed any withdrawals without a penalty and if you close the account before the 12 months are over, interest drops to 2%.

The Co-Op bank has a 7% deal only for existing customers. Fixed for one year, you can save up to £250 per month and can skip months without penalties.

Nationwide used to have a market-leading 8% offer but that has now come down to 6.5%. Nationwide’s deal is a regular savings account, available exclusively to its current account customers.

For all of these you can just open an account to have access to the deal. Skipton Building Society offers a 7% but it is limited to customers who joined before January 2024.

Coventry Building Society has a 6.75% offer but again, only for those who have been members since January 2023.

Every deal mentioned here is covered by the Financial Services Compensation Scheme, so you are protected up to £85,000.

Watch: New regular savings account pays 6.75% to Building Society’s ‘loyal’ members

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