Best ISA, easy access, and fixed savings accounts this week with interest up to 8% | Personal Finance | Finance
This week’s best savings accounts offering interest rates of up to 8%
While Bank of England Base Rate remains at a 15-year high of 5.25 per cent, high street banks and building societies are still offering savers competitive returns on their money.
Interest rates have fallen in recent weeks, but some savings accounts are still paying rates of up to eight per cent and a significant number of people are missing out. According to Paragon Bank, almost one in six fixed and immediate access accounts opened in the 12 months to August 2023 offered a rate of 1.5 per cent or less.
The central banks among the Challenger banks have come out on top across a number of sectors, however, Rachel Springall, financial expert at Moneyfactscompare.co.uk noted: “They also act quickly to attract offers when they are fully subscribed. Consumers will need to act quickly to grab the best deals available and consider the best-known brands when comparing deals.”
There are a number of different accounts to suit a range of needs, from easy access accounts to fixed term savers, and some are offering some of the highest interest rates in recent years. Here are the easy access, regular, fixed rate and cash ISA accounts available this week.
READ MORE: Savings account rates drop AGAIN but you can get 5.5% today
The Bank of England’s Base Rate has been frozen at 5.25 per cent since September
The best savings accounts with easy access
Easy access accounts tend to be more flexible, as these allow savers to make payments and withdrawals with minimal restrictions and small initial deposit requirements. Given the current high cost of living environment, a survey from Hodge found that more than half of respondents had to dip into their savings for everyday expenses.
The savings accounts have the highest interest rate for easy access Metro Bank Instant Access Savings Account with an Equivalent Annual Rate (AER) of 5.22 percent. A minimum of £500 must be deposited within 28 days to earn the limited edition rate and interest is paid monthly. Access is allowed at any time in branch, online or by phone.
Ulster Bank Loyalty Saver it falls just behind AER of 5.2 per cent on deposits over £5,000. Those with deposits below £5,000 will be paid a lower AER of 2.25 per cent. Interest is paid annually and on account closure, and withdrawals are allowed at any time up to daily limits.
For savers with a smaller deposit, Beehive Money Limited Issue Easy Access (Issue Two) places just behind with an AER of 5.15 percent. The account can be opened with £1,000 and up to £85,000 can be invested in total. Interest is paid annually and unlimited withdrawals are allowed, provided a minimum of £1,000 is kept in the account at all times.
Metro Bank’s volume access saver is currently at the top of the list in its category
Top fixed rate savings accounts
Fixed rate savers can be beneficial during the current period of falling rates, as these allow people to lock in an interest rate for a set period of time. However, they typically impose stricter withdrawal limits on customers, meaning savers should be comfortable investing money without needing to access it during the account term.
Metro Bank tops the table for one-year fixed savings accounts with an AER of 5.91 per cent. The account can be opened with a minimum deposit of £500 and interest can be paid monthly or annually. Up to £2 million can be invested in total and no withdrawals are allowed. People must have another Metro Bank account to apply.
For two-year solutions, the Union Bank of India takes the top spot with an AER of 5.8 percent. The account can be opened with £1,000 and interest is paid on maturity. Up to £1million can be invested in total and no withdrawals are allowed.
Al Rayan Bank ahead of three-year solutions with an Expected Rate of Profit of 5.6 percent on a 36 Month Fixed Term Deposit. The account requires a minimum deposit of £5,000 and profits are paid quarterly. Up to £1million can be invested and withdrawals are not allowed until the end of the term.
Meanwhile, JN Bank topped the list for four, with five years of resolution Fixed Term Savings Account offering AERs of 5.5 per cent on each. The accounts can be opened with a minimum deposit of £1,000 and interest is paid annually and on maturity. Up to £500,000 can be invested in total and no withdrawals are allowed.
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Regular savings accounts
Regular savings accounts can be a good option for those looking to get into the savings habit, as these accounts tend to offer higher interest rates and the terms generally encourage savers to pay money into the accounts monthly.
All over the country still tops the regular savings account market with an AER of 8 percent. The rate is fixed for 12 months and Brits can start with £1.
Interest is calculated daily and is paid on maturity of the account one year immediately after opening. The rate is based on how many withdrawals a person makes in a year – if four or more are made, the interest will drop to 2.15 per cent. Savers can deposit up to £200 per month and savers must have a National Current Account to apply.
An online based bank right at first it falls just behind AER by seven percent. The rate is fixed for 12 months and Brits can start with £25.
Interest is calculated daily and is paid on maturity of the account one year immediately after opening. Savers can deposit between £25 and £300 per month in multiples of £5. No withdrawals are allowed during the 12 month term. In this case, the account will have to be closed and interest will be paid up to the date of closure at the variable rate of the Savings Account instead.
Lloyds Bank Monthly Saver Club Lloyds Bank followed by an AER of 6.25 percent. A £25 deposit is required to open this account and the term lasts for 12 months, meaning that up to £4,800 can be invested over the course of a year.
The account is available to Lloyds Club customers and allows unlimited withdrawals without penalty. The interest rate is fixed and will be paid on the day the account is opened, and deposits between £25 and £400 must be invested before the 25th of each month.
Top ISAs for cash
Cash ISAs are a very popular choice, as these accounts allow savers’ money to grow without paying tax on the interest above the Personal Savings Allowance (PSA). However, some ISAs may come with other restrictions, such as early access or transfer penalty fees.
For those who need immediate access to their cash ISA, Metro Bank topped the list with an AER of 5.11 percent. There is no minimum investment, interest is paid annually, and withdrawals can be made at any time.
For those looking for a fixed rate, Head of Virgin Money Exclusive One Year Fixed Rate Cash ISA (Issue Seven) tops the list for one-year solutions with an AER of 5.85 percent. There is no minimum investment to start and a fee equal to 60 days interest will be applied in case of early withdrawal.
Saffron Building Society currently tops the table for two-year fixed ISAs with an AER of 5.4 per cent. The account can be opened with a minimum deposit of £500 and interest is paid annually. If early access is required, the account will need to be closed and 180 days interest deducted.
Close Brothers Savings it takes the best point for three-year solutions with an AER of 5.15 percent. The accounts can be opened with £10,000 and interest is paid annually. Earlier access is only permitted at closing and will be subject to a 270 day loss of interest.
For longer term savers, Melton Building Society tops the table for five-year ISAs with an AER of five per cent. The account can be opened with a slightly smaller deposit of £1,000 and interest is paid annually. Early withdrawals from this ISA will be subject to 180 days of interest loss.
With Chancellor Jeremy Hunt due to deliver his second Autumn Statement in a few days, many experts are calling for reforms to ISA allowances. Jason Hollands, investment platform managing director Best investment, said: “Just weeks ago, there was a lot of talk about a big change to Individual Savings Accounts on the horizon, which would aim to simplify the ISA regime, encourage savers to have more money in their -investors and support support for. the UK stock market is under pressure. One idea that has been mentioned is to create an additional ISA, on top of the current allowance, which would be available exclusively to invest in UK shares.
“However, this could all be a damp squib as the latest reports based on ‘sources’ suggest that the Government has hit back at the idea of an additional ISA allowance for the UK and the main initiative now is to let go. People open multiple ISA accounts with different providers each tax year, provided they do not exceed the total annual allowance. While some additional flexibility is generally welcome, if this is all there is to it, the great ISA reform may be too low.”
Tax-free ISAs are more important than ever to investors because of the sharp cuts announced by the Chancellor to the annual dividend allowance and capital gains exemptions this financial year, both of which are set to halve again in next April.
Mr Hollands said: “However, the adult ISA allowance is frozen at £20,000 from the 2017/18 tax year. We would like to restore the real value of the allowance to increase to at least £25,760 to adjust for the effect of CPI inflation from April 2017.”
Phil Hall, director of Hall PR & Public Policy, who previously led a working group that called for the Government to review the ISA landscape, said: “A number of years ago we had the idea of some of the ISA savings products which was vague to delete, to complete. Cash ISAs and investment ISAs combined into what we simply call ‘All ISAs’ along with the removal of the £20,000 ISA savings limits in favor of a lifetime limit that matches the lifetime savings limit for pensions.
“Even though this was back in 2018, the premise still holds up today and is worth considering. So, if the Government is serious about simplifying the ISA regime and encouraging the saving habit, re-examining these ideas is a great starting point.”
Mr Hunt will announce the Autumn Statement on Wednesday 22nd November.
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