In the current economic climate, savvy customers need to shop around to find the best high interest savings accounts. The lack of movement on the Bank of England’s base rate means that savers are continuing to see relatively low returns on their investments. The average interest rate on a typical easy access savings account is just over 1% and, given the dismal predictions for the future of the UK economy, this is unlikely to improve any time soon.
One option is to put your money in a Cash ISA. With an average interest rate of around 2.5% AER this is a good option for those who are not already using their tax-free allowance. You can save up to £5,340 per year tax-free. Online savings accounts also offer higher rates of interest, but withdrawals are often limited to three or four times a year.
If you don’t mind locking away your money, fixed rate bonds are a good option for people looking for high interest savings accounts. The average rate is 3% on a £1,000 investment although you could attract a higher rate if you have more to invest, or are prepared to keep your money untouched for longer. You will lose some, or all, of the interest however if you withdraw your money early.
Banks and building societies often offer introductory bonus rates to attract new customers. These can be a good option if you are looking for a high interest savingsaccount, but check the small print to see what happens when the bonus period ends. If the interest rate is not competitive, move your money to a different account at the end of the bonus period.
With everyone suffering from the impact of high inflation and low interest rates, it pays to spend some time shopping around for a better deal.