The best savings rates - avoid restrictions and low rates | moneyfacts.co.uk

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Michelle Monck

Michelle Monck

Consumer Finance Expert
Published: 26/01/2021

Savers looking for an easy access account or a regular saver account will find it more difficult than last year to get a top rate deal as banks and building societies increasingly restrict their accounts. These restrictions include limiting accounts to existing customers, specific geographic regions or only allowing applications in branch – an option that is limited due to the current Coronavirus restrictions. Other exclusions include Virgin Money that restricts its regular savings accounts to those that use their Home Buying Coach app and Principality Building Society’s regular savings account, the Learner Earner Issue 3 that is only available when both a parent and a child open a relevant account.


Right now, three out of the top ten easy access rates, six of the top ten easy access ISA rates and eight of the top regular saver rates include some form of restriction.

Savers can still get the best easy access and regular rates – if they know where to look

The best rate for a regular savings account is currently advertised at 3.00%, but due to restrictions, the best open market rate is 1.40% gross with the 3 Year Regular Saver from Furness Building Society at 1.40%. Savers can add a maximum of £250 per month and need to make at least 12 monthly payments to qualify for the interest that is paid on anniversary of the account opening. Savers will need to telephone the building society directly to request an application pack and apply by post(applications in branch are likely to be limited due to Coronavirus restrictions).


Those wanting an easy access account including an ISA variant can still get the highest rate of 0.60% gross despite the restrictions. These best savings rates are available from ICICI Bank UK and its Super Savings Account (savers must open a linked ICICI Bank current account to facilitate withdrawals) and Al Rayan Bank with its Instant Access Cash ISA (Issue 2) - paying an expected profit rate of 0.60% monthly.

Our tips to get the best return on your savings right now

Savers facing this bleak market may wonder if there are any good rates left and wonder how to find them. A low-rate environment also increases the number of scammers trying to con people out of their savings with the promise of high interest rates.


We have scoured the market to help find the very best regulated accounts available right now and provided some tips on how to avoid the scammers.

1. Open a high interest bank account at 2%

The best rate of interest available to adults on a bank account is currently an introductory 2.00% gross with the FlexDirect- Funded account from Nationwide Building Society. The rate of 2.00% gross is paid on balances up to £1,500 for the first 12 months (reducing to 0% thereafter) and those opening the account must pay in at least £1,000 every month.

2. A maximum rate of 1.50% with a five-year fixed rate bond

The best return for a fixed rate bond right now is a five-year Fixed Term Deposit Account from Gatehouse Bank. This account has an expected profit rate of 1.50% and can be opened with a £1,000 deposit. The account can be opened online, and interest paid on anniversary. Savers should consider the risk of inflation rising over the next five years, the current rate of inflation (CPI) is 0.8%, but this was 1.5% in March 2020.

3. Earn 1.30% with a regular savings account

The best rate for a regular savings account without geographical or usage restrictions is the Regular Saver (4) account from Coventry Building Society at 1.30% gross. Savers can deposit between £1 and £500 per month up to a maximum balance of £6,000. This money will need to be new money to the building society and after 12 months the funds will move to the Easy Access Saver (7) account.
The real return on regular savings accounts compared to other types of account is reduced as the interest is applied to a growing balance over time rather than a lump sum. Our guide explains more about how the interest is calculated.

4. Earn 1.25% with a Chip+1 account - exclusive to Moneyfacts.co.uk

For a limited time Moneyfacts.co.uk visitors can open a Chip+1 account offering a bonus of 1.25% on savings up to £5,000. Savers need to download the Chip app and use the VIP passcode MF4CT5 to open the account. Savings are protected by the Financial Services Compensation Scheme (FSCS) by ClearBank.

How to beat the scammers

Savers need to be aware that unsolicited offers made to them about high return investments or high interest rate accounts are likely to be fraudulent. These scams are more and more sophisticated with scammers using known banking brands to try to appear genuine to their victims. Scammers have also been known to create fake websites and printed and email prospectuses, all to convince savers to send them their money.

If a saver is concerned about a potential scam they can check if a bank is authorised by referring to the Prudential Regulatory Authority website and look for regulated firms for advice, investment, pension or payment services on the Financial Conduct Authority’s (FCA) register. Other sources of helpful information to help identify scams include looking at the websites of Take Five and ScamSmart.

Other options to a traditional savings account

Those looking to increase their returns may also look to investments including stocks and shares ISAs – but these carry higher risks. Savers can either use an investment platform to make investments or speak to a independent financial adviser about these products.

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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfacts.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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