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Best savings accounts for 2024

The eleven savings accounts with the best interest rates for 2024
The eleven savings accounts with the best interest rates for 2024

Regardless of why you’re saving – for a house, holiday, or as a buffer to cover emergencies – you’ll want to make sure your money is working as hard as possible.

Seeking out an account with a more competitive interest rate can make a huge difference.

For example, Punjab National Bank is paying among the lowest returns, with its savings account offering 0.75pc. A saver with £50,000 in this account will earn around £376.29 a year in interest. Moving the deposit to the best buy easy access account from Cahoot, paying 5.2pc, would yield £2,662.87 a year, an extra £2,286.58.

To help you get the most out of your savings, The Telegraph has compiled the best rates available on the market right now for bonds, savings accounts, Isas and current accounts, using data from market analyst Moneyfacts.

What is a savings account?

Unlike a current account, which you’ll use to pay your bills and for everyday spending, a savings account is designed to be the place where you can stash your spare money away, where it will hopefully grow over time.

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There are several different types of savings accounts – some offer variable rates, which can change at any time, while some require you to commit to locking your cash away for a fixed amount of time.

In theory, the more inconvenient an account is, the more interest you should earn – but it’s not always the case.

The best bond rates for 2024

Fixed-rate bonds tend to pay the highest rates on the market, but the top rates can currently be beaten (albeit not by much) by several types of variable accounts – including the top-rate easy-access account.

What savers need to weigh up is whether to take a fixed deal in order to get guaranteed interest for a longer term, or take a chance on a variable-rate and hope the interest doesn’t get slashed soon.

The current top-rate accounts all require you to lock away at least £1,000 – with one that stipulates at least £5,000 to open the account. You’ll therefore need to ensure you can do without this relatively large sum of money for the duration of the fixed term.

Additionally, where interest is paid on maturity after several years you might find it exceeds your tax-free personal savings allowance, potentially leaving you with a tax bill.

One-year fixed rate

Al Rayan Bank 12 Month Fixed Term Deposit – 5.2pc

Requires a deposit of at least £5,000 to open the account. Interest is paid quarterly.

Note that as Al Rayan Bank is a Sharia-compliant provider, it offers an “expected profit rate” (EPR) rather than an “annual equivalent rate” (AER) – this means the advertised rate of return is not guaranteed.

Two-year fixed rate

RCI Bank UK 2 Year Fixed Rate Bond – 5.05pc

Account requires at least £1,000 to be opened. Interest is paid annually on the account’s anniversary.

Five-year fixed rate

Birmingham Bank 5 Year Fixed Rate Bond – 4.58pc

You must save at least £5,000 in this account. Interest is paid on annually on the account’s anniversary.

The best variable savings account rates for 2024

Variable-rate accounts tend to come with more flexibility than fixed-rate deals; often, you can make as many withdrawals as you like without taking a hit on interest, but some specific deals with have their own restrictions.

In general, easy access accounts let you take out money whenever you like; regular saver accounts require you to make deposits regularly; notice accounts allow you to make withdrawals, but only if you give your provider a prescribed amount of notice.

Easy-access savings account

Cahoot Sunny Day Saver – 5.2pc

Rate is paid on balances between £1 and £3,000 for one year; no interest is paid on balances over £3,000, so it’s not advisable to save any more than this amount.

After the year is up, you’ll need to take a look for another account.

Regular savings account

First Direct Regular Saver Account – 7.00pc

This account has a 12-month term and can be opened with just £25. You must pay in between £25 and £300 a month, and withdrawals during the term are not permitted. Interest is paid on maturity. Only for those with a First Direct current account.

Notice savings account

Hinckley & Rugby Building Society 180-Day Notice Account – 5.25pc

You must deposit at least £2,500, and interest will be paid annually. You must give 180 days’ notice before making a withdrawal or closing the account.

The best current account rates for 2024

In some cases, current accounts will pay interest on the balance of money they hold, which can be useful if you don’t want the hassle of transferring money between multiple accounts.

Nationwide FlexDirect Current Account – 5pc

Interest is paid on balances of up to £1,500, and only for the first 12 months. Additionally, you must pay at least £1,000 a month into the account.

The best Isa rates for 2024

Cash Isas work in a similar way to savings accounts, except that all interest you earn is tax-free – and you’re restricted to depositing up to £20,000 in each tax year.

Easy-access cash Isa

Plum Cash Isa – 5.17pc

Savers can open this account with £1, but will only receive 3.00pc interest – you need to save at least £100 to get the higher 5.17pc rate. The rate also includes a 0.86pc bonus for the first 12 months, after which time the rate will drop.

Interest is paid monthly, and must be compounded.

One-year fixed rate

Virgin Money 1 Year Fixed Rate Cash Isa - 5.05pc

The account can be opened with just £1. Interest is paid on maturity.

Two-year fixed rate

State Bank of India 2-Year Fixed-Rate Cash Isa – 4.65pc

The minimum deposit is £1,000. Interest is paid on maturity. Earlier access is only permitted with 30 days notice, and no interest is paid if the account is closed before the first anniversary; interest is paid at 1pc if closure is after the first anniversary.

Three-year fixed rate

Shawbrook Bank 3-Year Fixed-Term Isa – 4.41pc

Account can be opened with £1,000. Interest is paid annually on the account’s anniversary.

What is happening to savings rates?

Hundreds of savings accounts currently offer a rate that beats CPI inflation, which rose by 3.2pc in March, down from 3.4pc in February, according to the latest figures from the Office for National Statistics.

However, savings rates are already lower than those seen last year, and that’s likely due to the fact that the Bank Rate has peaked. That being said, it’s been held at 5.25pc since August 2023.

Once the Bank Rate falls, it’s likely savings rates will quickly follow suit – as such, anyone looking to secure a generous account may need to act fast as many top rates don’t tend to hang around for long.

“The top rates on fixed-rate bonds are dominated by challenger banks, which have their own reasons to change rates, but they could well be monitoring swaps very closely,” says Rachel Springall, of Moneyfacts.

“Savers may wish to act now to secure a top fixed-rate bond, as rates in this market can come and go very quickly.”

While a lower inflation will put less pressure on your finances, it’s still important not to leave your savings languishing in an account with a poor rate.

Use our calculator to see how much your savings account is earning you – and how much more interest you could get if you switched.

What is the difference between an Isa, bond, savings and a current account?

A current account is a transactional account that typically pays no interest but gives you a lot of flexibility in how often you access your money.

With a savings account, the bank pays you interest for keeping your money and therefore imposes some restrictions on how many withdrawals you can make.

A fixed-rate bond is a savings account with a fixed term, usually between one and five years. Until the duration of the bond is up, you cannot withdraw your funds, but in exchange for the commitment you will typically benefit from a higher rate.

The difference between an Isa and other savings accounts is that there is no tax charged on the interest. Everyone can save up to £20,000 a year tax-free in an Isa.

How to choose the right account for you

The first thing to consider is whether you might need access to the funds in an emergency. A current account or an easy-access savings account will give you this flexibility.

However, you will get a higher rate if you are willing to lock away your funds for a set period (for example, in a bond). Generally, the longer the period, the higher the rate – however, this is not the case at the moment. Fixed-rate accounts with one and two-year terms are far higher than those with five-year rates.

The other thing to consider is whether you are at risk of exceeding your personal savings allowance. This is £1,000 for a basic-rate taxpayer and £500 for a higher-rate taxpayer. If you earn more than this in interest outside of an Isa, then you will have to pay income tax.

Use our calculator to work out whether you could breach your allowance, and if you should get an Isa.