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28 May 2022

6 tips on finding the best savings accounts as rates rise

Find out which accounts can help protect your cash from the effects of soaring inflation

Following a fourth increase in the Bank of England base rate, savings interest is on the rise – but it can still be difficult to find the top rates.

While you won’t find a deal that beats the current rate of inflation, finding a competitive interest rate can still help to minimise the corrosive effect inflation has on the value of your savings.

Here, Which? shares six tips on how to find the top savings rates, from finding local deals to securing existing customer perks.

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1. Check the top rates

The table below shows the top-rate restriction-free instant-access savings accounts, as well fixed-term accounts, by order of term.

Account typeAccountAERTerms
Five-year fixed term savings accountTandem Bank Five-year Fixed Saver2.85%£1 minimum deposit
Four-year fixed term savings accountGatehouse Bank Four-Year Fixed Term Woodland Saver2.75% (EPR*)£1,000 minimum deposit
Three-year fixed term savings accountAl Rayan Bank 36 Month Fixed Term Deposit2.85% (EPR*)£5,000 minimum deposit
Two-year fixed term savings accountAl Rayan Bank 24 Month Fixed Term Deposit2.8% (EPR*)£5,000 minimum deposit
One-year fixed term savings accountAl Rayan Bank 12 Month Fixed Term Deposit2.35% (EPR*)£5,000 minimum deposit
Instant-access savings accountAl Rayan Bank Everyday Saver1.31% (EPR*)£2,500 minimum deposit

Source: Moneyfacts. Correct as of 25 May 2022, but rates are subject to change. *The accounts from Al Rayan Bank and Gatehouse Bank are Sharia-compliant, and so offer an expected profit rate (EPR) as opposed to interest (AER).

What kind of account suits you?

If you know you'll want to make withdrawals from your savings, an instant-access account can offer flexibility  but the rates on offer aren't as high as other account types, and can change at any time. 

If you don’t need to dip into your nest egg any time soon, a fixed-term account offers a guaranteed rate for the duration of the term. This protects your money should interest rates fall, but conversely you can’t take advantage of any increases while your money is tied up in the account.

In general, the longer the commitment, the higher the return. However, as the table shows, the top two and three-year accounts pay more than the top-rate four-year fix. 

Before you commit to a fixed-term account, remember that if you do need to withdraw money in an emergency, you might face a hefty interest penalty. 

2. Look beyond the high street

If you want to find an account with the best rate, it’s worth shopping around. And as the above table shows, that often means looking beyond high-street banks for the most attractive deals.

Many newer online-only savings providers can offer higher rates, as they don't have to pay the overheads that come with physical branches. 

To keep on top of the best rates, check out our savings guide, which is updated each week with the top rates. It also features details of the Which? Recommended Providers (WRPs) for 2021-22. This status is only given to providers with the highest customer and product scores, based on a survey of thousands of UK savings-account holders.

3. Try a savings platform

Savings platforms such as Raisin, Aviva Save and Hargreaves Lansdown Active Savings offer a way to find deals with smaller or lesser-known banks and building societies.

They work a bit like a supermarket for savings accounts; a range of providers is available in one place for customers to browse and choose from, without having to apply for an account from scratch each time. Some platforms also offer exclusive rates.

Members have one login that they use to manage their account, and it can save a lot of time searching for the right deal.

4. Go local

Regional banks and building societies can offer some of the best deals on the market. Why? Because they usually have fewer stakeholders, which means the money they make can be more easily passed onto customers in the form of higher interest rates.

However, their accounts are often limited to those who live in the local area, or existing customers – so make sure you're eligible before you apply.

For instance, Bath Building Society's instant-access cash Isa pays a competitive 1.09%, but you can only open the account if you live, work or study in Bath.

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5. Consider regular savings accounts

Regular savings accounts are great for savers who don’t have a massive lump sum to deposit, and perhaps want to learn to get into the habit of saving. 

Most regular accounts require you to pay in a certain amount once a month, typically for a minimum of a year. There may also be a limit to the amount of times you can withdraw funds.

The biggest draw is the impressive interest rates touted by many providers  NatWest and Royal Bank of Scotland, for example, pay 3.3% on their regular saver accounts. 

Pay attention, though. You wouldn't be paid the headline rate of interest on the entire sum, because only the first month's payment would be in the account for the full year. 

You may therefore find that the overall return is equivalent to a savings account with a much lower interest rate. 

What's more, the rates are sometimes only paid for a limited time; when the rate drops, you ought to move your cash elsewhere.

6. Open a current account to unlock higher rates

Finally, many of the top rate deals advertised by providers are only available to those who already hold a current account with them.

For example, Chase offers an app-only, easy-access savings account with a market-leading rate of 1.5%, but you'll need to open a current account first. 

Similarly, First Direct current-account holders can get exclusive access to its regular saver account, which pays 3.5% for a fixed one-year term.

Jumping through the hoop of opening a new current account may be worth it if you want to use it; just watch out for any fees or minimum monthly payments that some accounts require.