While it seems that the Bank of England has finished its base rate increasing for the year – barring a major breakthrough on the political front – there might be some rate rises to look forward to in 2019. For those with £5,000 who would like to earn a decent rate of interest over the next six months while they wait for the base rate (and consequently savings rates) to rise further, we've looked at your best options.
To get a return from a short-term account without having to wait a whole year, you'll need to look for savings products that offer a monthly or quarterly interest option. To then be able to get access to your savings after six months, you have two options: a notice account or an easy access deal.
Notice accounts pay slightly higher interest rates, but require a certain amount of warning before you can take your money out again. This means that you'll have to note down in your diary the date – six months minus the amount of notice – when you will need to contact your provider. Beware also that the best-paying notice accounts tend to pay interest annually rather than monthly.
Easy access accounts offer lower interest rates, but much more freedom, with both withdrawals and additions usually allowed without restriction (although note that some accounts may only allow a certain number of withdrawals per year). Some accounts will come with a bonus that expires after a year, but given the six-month intention of this exercise, this shouldn't matter too much for interested savers.
To help you choose between the two types, we've compiled a table of all the best notice and easy access accounts that pay interest on a monthly or quarterly basis and allow deposits of £5,000. We've included the estimated amount of interest you can get over six months and a year – assuming that you'll let the interest compound – but as all these rates are variable, the amount of interest you actually get may well vary.
|AER||Term/notice||Estimated return over six months (on £5,000)||Estimated return over one year (on £5,000)|
|Secure Trust Bank
180 Day Notice Account
|1.86%*||180 days' notice||£46.36||£93.15|
|Secure Trust Bank
120 Day Notice Account
|1.84%*||120 days' notice||£45.85||£92.13|
|Secure Trust Bank
90 Day Notice Account
|1.82%*||90 days' notice||£45.35||£91.12|
|Charter Savings Bank
95 Day Notice - Issue 20
|1.81%||95 days' notice||£45.17||£90.74|
|Marcus by Goldman Sachs
Online Savings Account
|Post Office Money
Online Saver Issue 34
Double Take E-Saver Issue 8
|Source: Moneyfacts.co.uk||Compiled 13/11/2018|
Since the introduction of the Personal Savings Allowance, you don't need to worry about paying tax on any savings outside ISAs unless you earn more than £1,000 in interest in a single year. As you can see, you will not come close to this limit with even the best notice or easy access account.
If you would still like to guarantee the tax-free status of your savings and haven't yet used up your annual ISA allowance (£20,000 for the 2018/19 tax year), you could consider a cash ISA.
The highest rate you'll currently be able to get on an ISA paying monthly interest is 1.45% AER from Charter Savings Bank (on 95 days' notice), followed by 1.30% AER from Aldermore (on just 30 days' notice). And if you don't want to give any notice, there are a few no-notice ISAs, such as from Leeds Building Society, that pay a rate of 1.38% AER.
Savings rates can change at any time, so by the time you read this, the deals mentioned here may already be gone. To get the most up-to-date list of accounts that pay monthly interest and allow £5,000 deposits as well as flexible access, go to our savings search page and fill in your investment, select 'Interest Paid' monthly, uncheck the fixed account options and search away.
Alternatively, you could simply go to our monthly interest account chart and ignore those accounts that require a minimum deposit that is above £5,000.
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.