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13 top monthly interest savings accounts

13 top monthly interest savings accounts

Category: Savings
Date: 12/10/2012

Monthly interest savings accounts allow you to take a regular income from your hard-saved cash.

If you rely on your savings to supplement your income, perhaps if you're retired, you really need to maximise the amount you're getting.

Maximise your monthly savings interest

There are two key ways you can get a higher income from your savings:

  1. By using your ISA allowance
  2. By foregoing a certain amount of access to your savings

1. Cash ISAs

You can pay in £5,640 into a cash ISA in the 2012-13 tax year. Cash ISAs pay you an income tax-free, so have a distinct advantage over normal savings accounts if you're a taxpayer.

Just take a look at the example below:


Cash ISA paying 3.00%
Savings account paying 3.00%
Monthly income on a £20,000 savings pot
£50 per month
  • £40 per month for a basic rate taxpayer
  • £30 per month for a higher rate taxpayer

Banks and building societies automatically deduct 20% tax before paying you interest – so a gross rate of 3.00% actually becomes 2.40%. Higher rate taxpayers have to declare income on their tax return and pay an additional 20% to HM Revenue and Customs.

However, if you don't pay tax at all you can get your bank or building society to pay you all the interest by completing form R85.

2. Forego access to your cash

Generally speaking, the longer you are willing to not have access to your money, the higher the interest rates you can achieve.

For instance, while the best easy access savings account that pays interest monthly (for a savings pot of £20,000) is priced at 2.75% AER (Saga Telephone Saver Issue 6 ), the top 5 year fixed rate bond pays 3.75% AER (Triodos Bank Five Year Ethical Savings Bond).

For a basic rate taxpayer with £20,000 in savings, the 5 year bond will pay an extra £13.73 per month or 38% more.

Best monthly interest cash ISAs


Monthly income (based on £20k savings pot)
Further information
5 Year Fixed Rate

BM Savings 5 year fixed rate ISA
BM Savings

5 Year Fixed Rate ISA

£57.50
  • 3.51% AER
  • Earlier access to funds subject to up to 365 day loss of interest
  • ISA transfers in allowed

View 5 year Fixed Rate ISAs

3 Year Fixed Rate
Virgin Money 3 year fixed rate ISA
Virgin Money

Virgin Fixed Rate cash ISA Issue 24
£57.50
  • 3.50% AER
  • Earlier access to funds subject to 120 day loss of interest
  • ISA transfers in allowed

View 3 year Fixed Rate ISAs

2 Year Fixed Rate

Aldermore 2 year fixed rate ISA
Aldermore
2 Year Fixed Rate ISA

£49.33
  • 3.00% AER
  • Earlier access to funds subject to 180 day loss of interest
  • ISA transfers in allowed

View 2 year Fixed Rate ISAs

1 Year Fixed Rate
SAGA 1 year fixed rate ISA
SAGA

1 Year Fixed Rate ISA
£49.33
  • 3.00% AER
  • Earlier access to funds subject to 90 day loss of interest
  • ISA transfers in allowed

View 1 year Fixed Rate ISAs

Variable Notice
Aldermore 30 Day Notice cash ISA
Aldermore

30 Day Notice Cash ISA Issue 2
£43.66
  • 2.65% AER
  • AER guaranteed to be at least 1.65% above Bank Base Rate until 1.11.13
  • Earlier access to funds on 30 day notice, or 30 day loss of interest
  • ISA transfers in allowed
View Easy Access Cash ISAs
Variable Easy Access
Virgin Money Easy Access Cash eISA
Virgin Money

Virgin Easy Access Cash eISA
£47.00
  • 2.85% AER
  • ISA transfers in allowed
View Easy Access Cash ISAs

Figures Correct as at: 12.10.12

Best monthly interest saving accounts

You may be eligible to pay no tax, or the starting rate of tax on your savings income. Find out whether you qualify.


Monthly income (based on £20k savings pot)
Further information
5 Year Fixed Rate

Triodos Bank 5 year fixed rate bond
Triodos Bank

Triodos Five Year Ethical Savings Bond

Non Taxpayer
£62.50
Basic Rate Taxpayer
£50.00

  • 3.75% AER
  • No earlier access to funds allowed

View the best 5 year Fixed Rate Bonds

4 Year Fixed Rate
Halifax 4 year fixed online saver
Halifax

Fixed Online Saver

Non Taxpayer
£57.50
Basic Rate Taxpayer
£46.00

  • 3.51% AER
  • Earlier access on closure only and subject to penalty of 320 days' interest

View the best 4 year Fixed Rate Bonds

3 Year Fixed Rate
Metro Bank 3 year fixed rate bond
Metro Bank

Fixed Term Savings

Non Taxpayer
£57.50
Basic Rate Taxpayer
£46.00

  • 3.51% AER
  • No earlier access to funds allowed
  • Another Metro Bank account required to open bond

View the best 3 year Fixed Rate Bonds

2 Year Fixed Rate
BM Savings 2 year fixed rate bond
BM Savings

2 Year Fixed Rate

Non Taxpayer
£51.83
Basic Rate Taxpayer
£41.47

  • 3.15% AER
  • Earlier access subject to penalty of up to 180 days' interest

See the best 2 year Fixed Rate Bonds

1 Year Fixed Rate
United Bank UK 1 year fixed rate bond
United Bank UK

1 Year Fixed Term Deposit

Non Taxpayer
£50.17
Basic Rate Taxpayer
£40.13

  • 3.05% AER
  • No early access allowed

See the best 1 year Fixed Rate Bonds

Variable Notice Account
Aldermore 90 Day Notice savings account
Aldermore

90 Day Notice

Non Taxpayer
£51.00
Basic Rate Taxpayer
£40.80

  • 3.10% AER
  • AER guaranteed to be at least 2.00% above Bank Base Rate until 1.11.13
  • Earlier access to funds on 90 day notice

Find the best Notice Savings Accounts

Variable Easy Access Account
SAGA Telephone saver account
SAGA

Saga Telephone Saver Issue 6

Non Taxpayer
£45.33
Basic Rate Taxpayer
£36.27

  • 2.75% AER
  • Rate includes 2.22% bonus for 12 months

See the best Easy Access Savings Accounts

Figures Correct as at: 12.10.12

What next?

Find all savings accounts and cash ISAs
Compare variable monthly interest savings accounts
Find the best savings accounts online today

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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