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How to find the best savings account

We round up the best savings rates on the market in 2021 and explain how to pick the right account for you. 

In this article
Coronavirus (COVID-19) savings and Isas update Which savings accounts can beat inflation? What are the best savings deals in 2021?
Which are the best and worst savings providers? Which? Recommended Providers for savings, 2020-21

Coronavirus (COVID-19) savings and Isas update

Some of the rules around certain savings products have been relaxed for customers who have been affected by the coronavirus crisis.

Keep on top of the latest news and advice related to the COVID-19 pandemic with Which?

Which savings accounts can beat inflation?

Inflation fell to 0.4% in February 2021, down from 0.7% the month before, according to the latest figures from the Office for National Statistics (ONS).

Below, we've listed the accounts paying the most interest on cash across instant-access, notice and fixed-rate deals at the time of publishing.

The Which? Money Compare savings tables let you search hundreds of savings accounts from providers large and small to find a great account based on the quality of service as well as cost and benefits.

Regular savings accounts

The best regular savings accounts pay a higher interest rate than the current rate of inflation, but to access them you'll need to have a current account with the same provider.

In the past, these accounts have offered interest rates as high as 5% but these disappeared last year.

Bear in mind that unlike fixed-rate bonds or instant-access accounts, which allow you to deposit a lump sum, you'll be much more restricted on the amounts you can pay into a regular savings account: maximum monthly deposits are typically around £250.

What's more, the rates are sometimes only payable for a limited time - typically 12 months.

Current accounts

Despite a series of rate cuts on popular interest-paying current accounts, many still offer meaningful returns, albeit only on small balances. You'll also need to make sure you pay in the required minimum monthly amount to qualify for interest.

Nationwide's FlexDirect account currently pays 2% AER on balances up to £1,500 for the first 12 months, generating a maximum return of £30. The rate will drop to 0.25% AER after that. You're also required to pay in at least £1,000 a month.

 

What are the best savings deals in 2021?

Instant-access savings accounts (unlimited withdrawals)

Excluding accounts with limited withdrawals or other restrictions, the best instant-access savings rate is 0.4% AER, offered by Charter Savings Bank, Hampshire Trust BankInvestec, Marcus by Goldman Sachs, Punjab National Bank, RCI BankShawbrook Bank and Tandem Bank.

The next-best rate is 0.37% AER from Atom Bank.

One-year fixed-rate savings accounts 

If you're willing to tie up your savings for a year, the best rate currently available is 0.6% EPR from the Bank of London & The Middle East and United Bank UK.

The next-best rate is 0.59% AER from Hampshire Trust BankShawbrook Bank and Zopa.

The accounts from the Bank of London & The Middle East and United Bank UK are sharia-compliant products, and so offer an expected profit rate (EPR) as opposed to interest (AER). 

Two-year fixed-rate savings accounts 

The best rate for a two-year account is 0.8% EPR from the Bank of London & The Middle East.

The next-best rate is 0.76% AER from DF Capital.

The account from the Bank of London & The Middle East is a sharia-compliant product, and so offers an expected profit rate (EPR) as opposed to interest (AER). 

Three-year fixed-rate savings accounts 

For a three-year term, the highest rate is 0.91% AER from Zopa.

The next-best rate is 0.9% EPR/AER from Al Rayan Bank, Cynergy Bank and Hodge Bank.

The account from Al Rayan Bank is a sharia-compliant product, and so offers an expected profit rate (EPR) as opposed to interest (AER). 

Four-year fixed-rate savings accounts

The best rate for a four-year account is currently 0.95% AER, offered by Zopa.

The next-best rate is 0.91% AER, offered by Ikano BankNote this account is not covered by the Financial Services Compensation Scheme, but is covered by the Swedish equivalent.

Five-year fixed-rate savings accounts 

The best rate is 1.3% AER from Hodge Bank.

The next-highest rate is 1.26% AER from Charter Savings Bank.

Where possible, we've linked from the account names to more details on Which? Money Compare, a comparison site for savings accounts offered by Which? Financial Services.

Which are the best and worst savings providers?

We know that customer service is an important factor for many people when choosing a savings account. But how do you find a bank or building society that combines great rates with top-notch customer service?

Which? is here to help. We've asked thousands of savers to rate their bank or building society, enabling us to create unique customer scores for all the major providers.

We've also analysed thousands of savings products and given each provider an overall product score, highlighting which companies offer consistently competitive rates. The full results from our 2020 analysis are as follows:

Best and worst savings providers

Which? Recommended Providers for savings, 2020-21

Each year, we name the very best savings providers as 'Which? Recommended Providers' (WRPs). To win this award, the bank or building society must:

  • achieve a customer score of 70% or above;
  • achieve an above-average product score;
  • offer a savings account which sits in the top 10 in at least one category and another account sitting within the top half of at least one category;
  • be fully covered by the UK Financial Services Compensation Scheme (FSCS); and
  • offer products which are available nationally and are not tied to the purchase of another product with the same provider.

This year, our WRPs are:

Principality Building Society

Leading the way this year with a top customer score of 75% is Principality Building Society. In an era of rock-bottom interest rates, Principality customers appreciated a respectable return on their savings, awarding four stars for this in our survey.

Click the link to see Principality’s top-interest easy access account on Which? Money Compare, the Which? financial comparison site.

Aldermore

Maintaining its Which? Recommended Provider status for the second year in a row, Aldermore achieved five stars for customer service and also scored well for interest rates, clarity of statements and transparency of charges. 

Check out Aldermore’s easy-access account with Which? Money Compare.

Skipton Building Society

This building society has a stellar 81% product score, a strong 70% customer score and earned an impressive five stars out of five for its customer service.

About Which?'s savings account research

Scores and star ratings are based on a survey of 6,474 members of the general public in July 2020.

Which? Customer Score

This is Which?'s rating for customer satisfaction, based on feedback from real customers. The score is calculated based on customers' overall satisfaction with the brand, and how likely they are to recommend it to others.

Product score

We analyse nine key elements of savings accounts, from account management and restrictions to how often interest is paid, in order to calculate a product rating score. 

Providers must also offer an account sitting in the top 10 in at least one category of savings accounts and, if they offer more than one account, another product sitting within the top half of at least one category.

This ensures that the providers we endorse offer consistently good rates along with excellent customer service. 

Important note

Where possible, we've linked from the account names to more details on Which? Money Compare a comparison site for savings accounts offered by Which? Financial Services.

Please note that the information in this article is for information purposes only and does not constitute advice. Please refer to the particular terms and conditions of the savings account provider before committing to any financial products.

Rates correct at time of publishing. Last updated 8 April 2021.

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