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Top accounts to kickstart your 2016 savings habits

Top accounts to kickstart your 2016 savings habits

Category: Savings

Updated: 04/01/2016
First Published: 04/01/2016

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Is one of your resolutions to save more this year? If so, bravo! It's something we all need to get into the habit of, but to ensure you stick to your goal – and maximise your returns in the process – you'll need to find the right savings account. We're here to help, so read on to find the top accounts that can kickstart your savings habit and give you the returns you need to make it all worthwhile.

The cash ISA

A cash ISA should ideally be your first port of call, as these are the only accounts that currently pay interest entirely tax-free. You can be safe in the knowledge that the taxman won't take a chunk of your hard-earned cash, and with inflation still being so low, you needn't even worry about the value of your savings being eroded too much.

So, just what accounts could be right for you? Chances are you'll want one that pays the best rate possible, and currently the top pick comes from United Bank UK. Its 5 Year Fixed Rate Cash ISA pays a rate of 2.55%, so it could be ideal if you've got a long-term savings goal.

Alternatively, if you're still testing the savings waters and don't want to lock your money away for that long, the top one-year ISA comes from Al Rayan Bank, with its 12 Month Fixed Term Cash ISA paying an expected profit rate of 1.90% on maturity. Or, for true simplicity, the top instant access ISA comes from Post Office Money, with its Online ISA – Easy Access Issue 3 paying a variable rate of 1.51% from £100.

The fixed rate bond

If you've already used your ISA allowance for the year – or if you've got an easy access ISA but want to avoid temptation for the longer term, too – a fixed rate bond could be ideal. These offer the promise of better rates on the provision you keep the money locked away, and if you're sure you won't need access to the cash, they could be a great way to maximise your returns.

Currently, the top pick comes from AgriBank. The five-year version of Fixed Rate Savings Account offers a market-leading 3.15% yearly, but if it seems like too much of a commitment, you can get an impressive 2.88% from Al Rayan Bank's 36-month bond. Alternatively, even a one-year account could offer the rates you're after, with the best of the bunch coming from Milestone Savings (its Fixed Term Deposit pays an expected profit rate of 2.10%).

The regular saver

If you want to get into the habit of saving regularly, why not open a regular savings account? These accounts don't require significant lump sum investments like many fixed rate bonds, but nor do many of them allow early access or let you miss payments – most stipulate that you need to pay in a minimum amount each month, and that you need to keep the account for the full term, otherwise a lower rate will be paid or the account will be closed. This combination makes these accounts the ideal way to really get into the habit, and you can often earn higher rates of interest, too.

Kent Reliance currently takes the top spot in this sector, with its branch-based one year regular saver offering a market-leading variable rate of 4.00% on maturity. It requires a minimum monthly deposit of £25 up to a maximum of £500, so you could have amassed a nice little sum – and will definitely have got into the habit – once the term has come to an end.

The easy access account

Last but not least is the easy access account. These generally allow you to pay in and withdraw money whenever you wish (although bear in mind that some have certain limitations on the number of withdrawals that can be made per year), often making them the ideal choice for those new to the savings game. You can earn up to 1.65% yearly, too – the rate currently offered from ICICI Bank UK as well as RCI Bank's Freedom Savings Account – so it can offer the perfect compromise between returns and convenience.

Get started!

For many people, the key to achieving a savings goal is motivation, and there's nothing quite as motivating as seeing the interest add up. It'll make all those little sacrifices seem worth it – the lack of takeaway coffees, fewer nights out, not quite as many shopping trips – and with the right account by your side, you could have all the motivation you need. Check out our best buy tables for more options and see if you can get into the habit.

What next?

Find the best savings rates

Best cash ISA rates

Top 6 inflation-beating cash ISAs

Compare the best fixed rate bonds

Find the best regular savings accounts

Instant access savings accounts

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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