Best High Interest Savings Accounts: Top Picks for 2023

What are the Best High-Interest Fixed Rate Accounts?

When it comes to fixed-rate bonds, it is important to find the best deals. A research was conducted in November 2023 to find the best deals over terms ranging from one to five years. The following are the best high-interest fixed rate accounts:

Union Bank of India (UK) Fixed Rate Deposit 1 Year

Union Bank of India’s UK operation offers a competitive 6.05% AER (fixed) on deposits from £1,000 for a one-year bond. Savers can deposit up to £1 million, although only the first £85,000 will be covered by the Financial Services Compensation Scheme (FSCS). It can be opened and managed in a branch or via post, either individually or jointly with another adult. Interest is calculated daily and paid at the end of the 12-month term.

Pros & Cons

• Leading AER for 1-year bonds
• Joint account option
• High minimum opening deposit
• No online banking option

Union Bank of India (UK) Fixed Rate Deposit 2 Year

Union Bank of India (UK)’s two-year bond pays a leading rate of 6.00% AER (fixed) on deposits between £1,000 and £1 million. Note that only the first £85,000 of the balance is covered by the Financial Services Compensation Scheme (FSCS). Savers will need to visit a branch or apply via post to open this bond as Union Bank of India does not currently offer online or telephone banking. The account can be held in a sole name or jointly with another adult. Interest is calculated daily and paid annually – either back into the bond or into an allocated current account. It’s worth noting that interest on the account does not compound.

Pros & Cons

• Leading AER for 2-year bonds
• Joint account option
• Option to withdraw interest
• High minimum opening deposit
• No online banking option

JN Bank UK Fixed Term 3 Year

JN Bank’s three-year bond pays a competitive 5.97% AER on deposits from £1,000. It can be opened online, over the phone, or in JN Bank’s London (Brixton) branch. The maximum deposit is £100,000, though note that only the first £85,000 is covered by the Financial Services Compensation Scheme (FSCS). Interest on the account is calculated daily and added to the balance annually, where it compounds. There’s no option to withdraw interest into a nominated current account.

Pros & Cons

• Competitive AER for 3-year bonds
• Open online
• High opening deposit
• No option to withdraw interest

JN Bank UK Fixed Term 4 Year

Savers can earn 5.80% AER on this fixed-rate bond from JN Bank by locking away their cash for four years. The minimum opening deposit is £1,000, and the maximum balance is £100,000 (excluding interest). Note that only the first £85,000 deposited in the account is covered by the Financial Services Compensation Scheme (FSCS). It can be opened online, over the phone, or in JN Bank’s London (Brixton) branch. Interest is calculated daily and added to the balance annually – there’s no option to have interest paid out into a linked account.

Pros & Cons

• Competitive AER for 4-year bonds
• Open online
• High opening deposit
• Long time to lock away cash
• No option to withdraw interest

JN Bank UK Fixed Term 5 Year

This five-year bond from JN Bank pays a competitive 5.80% AER on deposits from £1,000 and £100,000. Note that only the first £85,000 deposited is protected by the Financial Services Compensation Scheme (FSCS). It can be opened online, over the phone, or in the provider’s London (Brixton) branch. Interest on the bond is calculated daily and paid into the account annually. There’s currently no option to withdraw interest before the end of the term.

Pros & Cons

• Competitive AER for 5-year bonds
• Open online
• High opening deposit
• Long time to lock away cash
• No option to withdraw interest

Best Easy Access Savings Accounts

Paragon Bank Double Access Savings Account Issue 3

Paragon Bank Double Access Savings Account Issue 3 is an online-only savings account that offers a competitive interest rate for savers. The account requires a minimum opening balance of £1,000, and savers can deposit up to £500,000. However, only the first £85,000 is covered by the Financial Services Compensation Scheme (FSCS).

Savers can make up to two withdrawals per year without penalty or notice. However, if they make more than two withdrawals, the interest rate drops to 1.50% AER (variable). Interest on the account is calculated daily and paid either monthly or annually.

Pros:

• Competitive AER
• Access cash any time
• Open online

Cons:

• Interest rate drops after 2 withdrawals
• High minimum opening balance

Beehive Money (Nottingham BS) Limited Issue Easy Access

Beehive Money (Nottingham BS) Limited Issue Easy Access is an easy access account that pays a competitive 5.20% AER (variable) on savings. The account can be opened and managed exclusively via the Beehive Money app, and the minimum opening deposit is £1,000. Savers can deposit up to £85,000, which is covered by the Financial Services Compensation Scheme (FSCS).

As an easy access account, withdrawals are permitted at any point without notice or penalty, and there is no limit on the number of withdrawals savers can make. Interest is calculated daily and paid into the account annually.

Pros:

• Competitive AER
• Unlimited withdrawals
• Access cash any time

Cons:

• High minimum opening balance
• App-only

Ulster Bank Loyalty Saver

Ulster Bank Loyalty Saver is an easy access account that pays up to 5.20% AER (variable) on savings. The account is open to any UK resident aged 16 or over, and there is no requirement to be an existing Ulster Bank customer. Although it can be opened online from £1, savers need to maintain a balance of at least £5,000 to get the headline rate. Lower balances earn a reduced rate of 2.25% AER.

Savers can access their cash any time with unlimited withdrawals. Interest on the account is calculated daily and paid annually.

Pros:

• Competitive AER
• Open from £1
• Open online

Cons:

• Balances below £5,000 earn lower rate
• Interest paid annually only

Cynergy Bank Online Easy Access Account Issue 68

Cynergy Bank Online Easy Access Account Issue 68 is an online savings account that pays a competitive 5.15% AER (variable). The account can be opened from as little as £1, and savers can make unlimited withdrawals without penalty or notice.

It is worth noting that Cynergy’s headline rate includes a bonus of 1.15%, which drops off after 12 months. After this, the interest rate reverts to 4.00% AER (variable). Interest is calculated daily and paid annually.

Pros:

• Competitive interest rate
• Open from £1
• Unlimited withdrawals

Cons:

• Interest paid annually only
• Interest rate drops after 12 months

Close Brothers Savings Easy Access Account Issue 1

Close Brothers Savings Easy Access Account Issue 1 is a savings account that offers a competitive 5.15% AER (variable) interest rate for savers who can deposit a lump sum of at least £10,000. The maximum balance is £2 million, but only the first £85,000 is covered by the Financial Services Compensation Scheme (FSCS).

Savers can access their cash at any time without notice or penalty. Interest on the account is calculated daily and paid into the account annually.

Pros:

• Competitive AER
• Open online

Cons:

• High minimum opening deposit
• Balances below £10,000 earn lower rate

Note: AER refers to Annual Equivalent Rate, which makes it easier to compare different savings accounts like for like. Gross is the rate paid before any tax is deducted. It will also include any bonus, so check the AER. All accounts offer FSCS protection up to £85,000 or £170,000 for joint accounts. Each bank listed has its own FSCS licence.

What’s our methodology?

To find the best savings accounts, the team used independent websites to search for the best fixed rate bonds and easy access accounts. For fixed rate bonds, the team considered the gross AER (Annual Equivalent Rate) across one to five years, which includes any bonuses, charges and fees across a 12-month period to make it easier to compare savings deals. The team also took into account factors such as minimum opening balance, maximum deposit, and how easy it is to open the account. It’s important to note that fixed rate bonds don’t allow withdrawals or additional deposits until the end of the fixed period.

For easy access accounts, the team ordered them based predominantly on gross AER (Annual Equivalent Rate), which includes interest and any bonuses on savings account across a 12-month period as well as any potential charges. The team also factored in minimum opening contributions, how the account can be opened and managed, and customer service data.

The team used independent website Savings Champion for the best deals and Fairer Finance for customer service scores. None of the savings accounts listed are linked to a current account, and anyone can open them, regardless of whether or not they’re an existing customer with the provider.

All accounts listed offer FSCS protection up to £85,000 or £170,000 for joint accounts, and each has its own FSCS licence. It’s important to note that the team did not consider any advertising or promotional material in their search for the best savings accounts.

What is a Savings Account?

A savings account is a type of bank account where individuals can deposit cash and earn interest on their money. The terms and conditions of a savings account may vary, including limits on how much money can be deposited, how often the account can be accessed, and when interest is paid. It is important to note that savings interest is paid tax-free, and most individuals won’t have to pay taxes due to the personal savings allowance.

What are the different types of savings account?

There are several types of savings accounts available in the UK, including notice savings, regular saver accounts, and cash ISAs. Each type of account has its own advantages and disadvantages, so savers should consider their individual needs before making a decision.

Notice savings accounts require savers to give advance notice to the bank or building society before making a withdrawal. Notice periods are typically 30, 60, or 90 days, and interest rates can be higher than those offered by easy access accounts. However, savers should be aware that these accounts do not allow quick access to savings.

Regular saver accounts require savers to deposit money each month up to a pre-set limit, usually £250 or £300. The interest rate on offer can be fixed or variable and is typically higher than that paid on easy access accounts. These accounts usually last for one year and have restrictions on when money can be withdrawn.

Cash ISAs allow savers to save up to £20,000 per year tax-free. While the introduction of the Personal Savings Allowance has reduced the appeal of cash ISAs, they can still be a tax-efficient option for individuals with high levels of savings. Cash ISAs can be easy access, notice accounts, or fixed.

Savers should carefully consider their individual needs before choosing a savings account. Factors to consider include the level of access needed to cash and the amount of money that can be put away. It is important to note that each type of account has its own advantages and disadvantages, so savers should do their research and choose the account that best suits their needs.

What is a Fixed Rate Bond?

A fixed rate bond is a type of savings account that offers a fixed interest rate for a set period of time. It is also known as a fixed-term or fixed deposit account. Fixed rate bonds generally offer higher interest rates than easy access savings accounts, making them an attractive option for savers looking to earn more on their money.

One of the main features of a fixed rate bond is that savers must be willing to lock their money away for a fixed period of time, usually between one to five years. However, some fixed rate bonds can have terms as short as six months or as long as seven years. In return for sacrificing access to their cash, savers receive a better interest rate than they would with an easy access savings account.

When opening a fixed rate bond, savers must make an initial lump sum deposit, which cannot be withdrawn until the end of the term. Additional deposits cannot be added either. The end of a fixed rate bond term is known as ‘maturity’, and this is when the money becomes accessible.

In summary, fixed rate bonds offer higher interest rates than easy access savings accounts, but savers must be prepared to lock their money away for a fixed period of time. It is important to carefully consider the length of the term and the initial deposit amount before opening a fixed rate bond.

What is an Easy Access Account?

Easy access accounts provide savers with the flexibility to deposit or withdraw cash at any time without incurring a penalty. Although they may not offer the highest interest rates, they offer full flexibility. However, some easy access accounts may have a minimum cash withdrawal requirement. Returns on easy access accounts are variable and may fluctuate with interest rate movements.

Frequently Asked Questions (FAQs)

How does interest work on a fixed rate bond?

Interest on a fixed rate bond is usually compounded and added each year. This means that the interest earned in the previous year is added to the initial deposit, and the interest earned on this new total is calculated for the following year. For example, if a saver deposits £10,000 in a fixed-rate bond paying 4.00%, they would earn £400 in the first year. In the second year, interest would be earned on £10,400 (£416), and after two years, the final balance would be £10,816. It is important to note that interest on bonds is taxable, but the personal savings allowance (PSA) means that most people do not pay tax on savings interest.

How does interest work on an easy access account?

Interest rates on easy access savings accounts are expressed as an Annual Equivalent Rate (AER), which includes the interest and any bonuses on savings account across a 12-month period (as well as any potential charges). The AER advertised is gross, which means before any tax is deducted. Interest on easy access savings accounts is often paid annually, either on a date of the saver’s choosing or the date the account was opened. It is important to note that the vast majority of people do not pay tax on savings interest.

How do you open a high interest savings account?

Fixed rate bonds can usually be opened online, in a branch, or by post or phone. Savers must deposit the entire amount of money they want to save in one transaction or within a short period of time. Once a fixed rate bond is up and running, additional money cannot be added. To open an easy access account, savers usually need to be 16 or over and a UK resident. They can be opened online, via an app, in a branch, or by telephone. Fixed rate bonds can be opened from the age of seven, although a parent or guardian will need to sign the application for a child. Some providers require a minimum age of 16 or 18.

Can I open a joint savings account?

The majority of savings accounts allow savers to open an account jointly with someone else, including many of the best buys (although not all do). However, a joint ISA cannot be opened due to its tax-free status, and some fixed rate bonds can only be opened by one person. A joint savings account provides double the FSCS limit, which is £85,000 protection per person per banking institution.

Can I open a savings account for my business?

Businesses have savings account options available depending on how they are set up. Sole traders or freelancers can save their business cash in a personal savings account, which is likely to pay the highest rates. Partnerships and limited companies will need to use specialist business savings accounts.

What is the minimum deposit?

Each fixed rate bond has a minimum and maximum investment, which are higher than other types of savings account. Typically, savers need to make a minimum deposit of at least £1,000 to open a fixed rate bond. Some bonds have a much higher minimum, of up to £25,000. Maximum deposits vary between bonds, with many allowing savers to deposit up to £1 million. Easy access savings accounts can often be opened with as little as £1.

How does inflation affect my savings?

Inflation can erode the value of cash, so it is important to seek out the highest possible interest rates to counter the losses caused by inflation. Unless savers have a savings account that pays a higher interest rate than inflation, they are effectively losing money. When inflation is very high, the spending power is reduced, and money does not buy as much.

What are the potential pitfalls?

The main disadvantage to fixed rate bonds is that any savings held in them cannot be accessed before the end of the term. Fixed rate bonds also mean taking a gamble on interest rates, as a better offer may become available part-way through the term if interest rates rise. Easy access accounts can mean bypassing some of the maximum potential returns available, but for many savers, this is offset by their flexibility.

Can I access cash in a fixed rate bond?

Cash in a fixed rate bond cannot generally be accessed until the end of the term. Savers are usually contacted by their provider a few weeks before their bond is due to mature to discuss options. These include withdrawing the money or investing it in another fixed rate bond. Some providers allow early withdrawals from fixed rate bonds, but this will come with a penalty. Rules about early withdrawals vary from provider to provider. For example, HSBC allows savers to withdraw all their money and close the product early if the initial deposit was less than £50,000. However, closing the bond incurs a penalty of 90 days’ interest. For balances of £50,000 and