Best UK savings accounts offering above inflation rates

Young woman putting money into a jar
Savings accounts have become the go-to product for those trying to beat inflation. (Sally Anscombe via Getty Images)

UK households are always looking for ways to make their money go further amid the cost of living crisis and savings accounts can 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 and consumers can now find UK savings accounts offering higher than inflation rates.

The UK rate of inflation came in at 2.3% in March, the lowest in nearly three years, according to figures from the Office for National Statistics (ONS).

Read more: Bank of England keeps interest rates at 16-year high

Savers should 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.

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

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 not touching your savings for a long period, usually between one and five years.

The best fixed-rate account currently offers 5.20% and is available from The Access Bank UK.

Its one-year fixed-saver offer requires a minimum of £5,000 and you can invest up to £500,000. Withdrawals are not allowed for the duration of the deal.

Union Bank of India operates in the UK and is offering 5.15% for a year and has lower entry requirements. The fixed-term personal savings account requires a minimum of £5,000 to be locked for 12 months. You can invest up to £1,000,000. Withdrawals are not allowed for the duration of the deal and you can only open it via email, branch or post.

SmartSave has a one-year fixed-rate deal that pays 5.13%, but it requires a minimum of £10,000. You can invest up to £85,000. Withdrawals are not allowed for the duration of the deal.

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 are 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 aren't too stringent, with the minimum balance required being £500.

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Metro Bank isn’t far off with its 4.61% interest rate and similar conditions. The account has a one-year fixed term and the minimum you can pay in is £500.

Lloyds (LLOY.L) has a fixed-rate savings product offering 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%.

Unlike easy-access savings, where interest rates can vary, fixed-rate accounts 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.

You must leave your initial deposit for a fixed period without making withdrawals. If you touch your money, you forfeit any interest.

Easy-access savings accounts let you withdraw your money without notice. With that ease of access comes lower interest rates, but they are a good option for those who think they might need their money in a hurry.

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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.

Ulster Bank has the highest paying offer for easy-access accounts: 5.20% if you have at least £5,000 to open the account.

Oxbury has the second highest-paying offer at 5.02%. You’ll need at least £20,000 to open the account.

Kent Reliance pays 4.96% with an easy-access account that pays interest at maturity. The account is opened via mobile banking and a minimum deposit of £1,000 is required.

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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.

Can’t decide on whether you want to put your money away and not touch it for a long period or keep it accessible at all times? 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.

These are ideal for those who know when they might need their cash but don’t want the temptation of dipping into it at any time.

You 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.

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Oxbury has a 90-day notice account that pays 5.25% after 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 £1,000 and £500,000 to apply.

Investec (INVP.L) has a 90-day notice account that pays the same 5.25% after three months. You need between £5,000 and £250,000 to apply.

Charter Savings Bank also pays 5.25%, with a 95-day account that takes £5,000 to open.

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

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. 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 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 come down to 6.5%. Nationwide’s deal is a regular savings account, available exclusively to its current account customers.

For all of the ones listed above, you can just open an account to access the deal.

Skipton Building Society offers 7%, but it is limited to customers who joined before January 2024.

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

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