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Revealed: the best savings accounts for small deposits
More than half of savers between the ages of 19 and 35 across all areas of the UK have less than £1,000 in their savings account, according to new data - which could lock them out of the best saving rates on the market.
Nationwide surveyed 10,554 people and found those in the 26-35 age bracket were most likely to have a savings pot worth under £1,000.
As you might expect, people's savings grow as they get older, yet almost half of savers aged between 56 and 65 said they had less than £1,000 in their savings account.
This means a large group of savers are being locked out of the top-rate accounts, which commonly require a minimum initial deposit of £1,000.
Here, we reveal how much you'll need to save to get the top rates as well as the best rates for more modest pots.
Where are people saving the least?
The maps below show the percentage of people in each UK region with savings of less than £1,000. You can flick between tabs to see the difference between age groups.
The largest proportion of savers with less than £1,000 are 26 to 35-year-olds living in the north west of England - nearly three in four reportedly have very small amounts saved.
This age range seems to struggle the most with savings across the whole of the UK, which is likely to be due to having to pay out for life events such as getting married, buying a home and having children.
As for which areas are saving the least, the data shows that those in Wales, the north west and West Midlands have the largest proportion of savers with less than £1,000 in savings across all age categories.
- Find out more:how to find the best savings account
How much do you need for the best-rate accounts?
The table below shows the highest-rate savings accounts on the market.
| Account | AER | Terms |
| Secure Trust Bank 5-Year Fixed-Rate Bond | 2.37% | £1,000 minimum initial deposit. |
| United Bank UK 5-Year Fixed-Term Deposit | 2.36% | £2,000 minimum initial deposit. |
| Secure Trust Bank 4-Year Fixed-Rate Bond | 2.29% | £1,000 minimum initial deposit. |
| Secure Trust Bank UK 3-Year Fixed-Rate Bond | 2.21% | £1,000 minimum initial deposit. |
| United Bank UK 3-Year Fixed-Term Deposit | 2.2% | £2,000 minimum initial deposit. |
| Bank of London & The Middle East 3-Year Premier Deposit Account | 2.2% (EPR*) | £1,000 minimum initial deposit. |
| Bank of London & The Middle East 2-Year Premier Deposit Account | 2.1% (EPR*) | £1,000 minimum initial deposit. |
*Expected Profit Rate. Source: Moneyfacts. Correct 6 December 2019, but rates are subject to change.
As the table shows, all 10 top-rate accounts require a minimum initial deposit of at least £1,000, with a couple that specify a minimum of £2,000.
Usually, the longer you lock away your money for, the higher the rate you'll get. But this is not currently the case.
Secure Trust Bank, United Bank UK and Bank of London & The Middle East's three-year fixed accounts beat all but two five-year fixed-term accounts. Bank of London & The Middle East's three-year account even beats its own four and five-year rates.
Note that half of these are from Islamic Banks, and pay an Expected Profit Rate (EPR) rather than a rate of interest in order to be Sharia-compliant. This means the bank pays customers a percentage of its profits, and while the rate is not guaranteed, we've never heard of instances where Islamic banks have paid less than the advertised EPR in the UK.
- Find out more: how to switch your savings account
What are the top rates if you have less than £1,000 to save?
It's clear that those with less than £1,000 to save are going to miss out on the highest rates right now.
According to Moneyfacts data, of the 764 fixed-term savings and cash Isa accounts currently on the market, just 376 allow a minimum initial deposit of less than £1,000 - that's just under half.
The table below shows the top-rate accounts available nationwide that require a minimum initial deposit of less than £1,000.
| Account | AER | Terms |
| Masthaven Bank 5-Year Fixed-Term Bond | 2.05% | £500 minimum initial deposit. |
| Metro Bank 3-Year Fixed-Term Savings Account | 1.95% | £500 minimum initial deposit. |
| Masthaven Bank 3-Year Fixed-Term Bond | 1.9% | £500 minimum initial deposit. |
| Metro Bank 5-Year Fixed-Rate Cash Isa | 1.85% | £500 minimum initial deposit. |
| Ford Money Fixed Saver 2-Year | 1.8% | £500 minimum initial deposit. |
Source: Moneyfacts. Correct 6 December 2019, but rates are subject to change.
These accounts still require a minimum of £500 to be paid in, so those with less than that will have to take another interest rate hit.
The top rate here is 0.32% short of the market-leading rate in the previous table, and 0.05% less than the tenth-highest rate.
You should also note that you'd need to lock your money away for five years to get the 2.05% AER, which can be beaten by a two-year rate if you had £1,000 to save.
The Metro Bank five-year Isa is the only account that's among the top rates for its term, yet it can still easily be beaten by several five-year savings accounts. That being said, it does benefit from being tax-free, as interest earned in an Isa does not count towards your personal savings allowance.
- Find out more:how to find the best cash Isa
How to boost your savings pot
If you've got a modest savings pot and want to boost it to unlock the market-leading rates you might want to look into getting a regular savings account.
The best regular savers pay up to 3% AER and allow you to pay in between £10 and £300 a month. This means if you can save the full amount you could build up a nest egg of up to £3,600 in one year.
To find the extra cash to put aside take a look at our guides 50 ways to make money and 50 ways to save money.
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Money Compare is a trading name of Which? Financial Services Limited.
