Savings rates exceed 5% – could they reach 6% again?

Savings rates are back above 5% AER for the first time in two years. But how much higher could they go?

Providers have been steadily raising savings rates since March 2026. Yet four years ago, the best deal paid 6.2%. So is it time to grab a top deal now, or should you hold out for more?

Here, we explain what’s happening to savings rates, what could happen next and why waiting to open an account could cost you.

What are the best savings rates?

This table shows the top rates for restriction-free fixed-term and instant-access savings accounts, ordered by term.

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Savers can find a top deal of 5% or more across all account types – both variable instant access and fixed bonds. 

Locking in for more than one year will get you the best rate, and although the table shows that Shawbrook Bank pays 5.25%, we found that GB Bank and Vanquis Bank also offer the same market-leading returns.

A couple of instant-access deals now offer rates as high as 5% AER. However, they may not suit everyone. The market-leading products from Cahoot and LemFi both have significant strings attached, such as balance and withdrawal limits.

The top deal for an instant-access account without restrictions is Cahoot's Simple Saver, paying 4.52% AER. 

• Find out more: best savings accounts 2026

Savings rates highest since 2024

This graph shows how average interest rates have fared since September 2020.

Savings rates tend to follow the Bank of England (BoE) base rate. After it was hiked 14 consecutive times between December 2021 and August 2023, savings rates soared, with the best deal hitting 6.2% AER in October 2022. When the BoE then cut rates, savings interest fell too.

The base rate has been held at 3.75% since December 2025, so it stands to reason that savings interest should also remain steady. However, rates have been climbing since March 2026 and are now at their highest since 2024. So what's going on?

Providers may be anticipating that conflict in the Middle East will continue to push inflation higher, potentially paving the way for further rate rises later this year. 

At the Bank of England's September meeting, three of the nine members of its Monetary Policy Committee voted to raise the base rate to 4%, although the majority voted to keep it at 3.75%.

Rates are also determined by how much actual demand there is for a product, and that can drive competition, pushing up rates for certain products. 

Another factor is banks’ financial targets. Firms may offer attractive savings rates to tempt customers to move their money over, helping them to boost their deposits and meet funding goals.

How much further will savings rise?

Returns won’t stay this high forever, and no one can predict exactly where they’ll go next. Despite the uncertainty, it's tempting to sit back and wait for rates to climb further.

But even if inflation stays high and an eventual base rate rise prompts providers to boost savings interest further, geopolitical events could quickly change the picture. Rates could just as easily fall, leaving you worse off for waiting.

While you wait, your money could be earning far less. When rates are competitive, it can pay to secure the best rate available for a period that suits you, rather than holding out for something that may never arrive.

3 ways to make the most of rising rates

Now could be a good time to review where you're keeping your savings. Here are three ways to make the most of the competitive deals currently on offer.

1. Fix for longer for best returns

The general rule of thumb is that the longer you fix for, the better the returns. The best deals available right now are for fixes lasting two to five years.

Even if shorter-term bonds regain the advantage, as they have over the past couple of years, locking in a competitive rate now is still likely to earn you more over five years than switching to a new one-year bond annually – unless there's a major economic shock.

2. Try savings laddering

If you want to take your savings strategy up a notch, try ‘laddering’, also known as the staircase strategy.

The idea is simple: rather than locking all your cash away for the same length of time, spread it across fixed-term accounts that mature at different points.

For example, you could split a lump sum between one, two, three, four and five-year fixes. You don't have to divide it equally between the accounts. You can tailor deposits to how much you’re comfortable locking away and when you might need the cash.

As each account matures, you can reinvest at the rates available at the time, while your longer-term fixes can lock in a rate if savings rates fall.

• Find out more: should you try the savings 'ladder' trend?

3. Keep track with a savings platform

If you're spreading your savings across multiple accounts, a savings platform could make life easier.

These platforms help you find competitive accounts and let you manage them with a single login. They also usually remind you when fixed-rate bonds are due to mature, so your money doesn't sit in a low-paying account.

However, savings platforms only work with selected banks and building societies, so you could miss a market-leading rate from a provider they don't list.

Also, check for fees. Some platforms, such as Aviva Save and Raisin, are free, but others take a cut of the interest before displaying rates or charge a percentage of your savings.

• Find out more: how do savings platforms work?

Watch out for the savings trap

Think carefully before you rush to take advantage of the record rates, as it could land you with a tax bill. 

The personal savings allowance means basic-rate taxpayers can earn up to £1,000 a year in savings interest tax-free, while higher-rate taxpayers get a £500 limit. Additional-rate taxpayers have no personal savings allowance.

In a climate of low savings rates, these allowances are usually more than enough for most savers not to worry about exceeding them – but the higher rates rise, the easier it is to end up with a tax bill. 

Basic-rate taxpayers earning 5.25% AER on their savings could end up paying income tax on interest earned with around £19,048. If you're a higher-rate taxpayer, the tipping point drops to just £9,524.

The best way to avoid a bill from HMRC is to open an Isa. They allow you to save up to £20,000 tax-free every year, and the cash Isa is the most popular.

Be aware that the limit for savers under 65 opening this type of account will fall to £12,000 from April 2027. Under-65s wanting to use their full Isa allowance will need to invest at least £8,000 in a stocks and shares Isa. 

• Find out more: the personal savings allowance explained