Hundreds of savings accounts currently offer a rate that beats CPI inflation, which remained at 4pc in January according to the latest figures from the Office for National Statistics.
However, inflation-beating offers might not last long. In line with the Bank Rate, which the Bank of England held steady at 5.25pc at its latest meeting, savings rates appear to have peaked, too. As such, anyone looking to secure a generous account may need to act fast as many top rates don’t tend to hang around for long.
“The top rates on fixed-rate bonds are dominated by challenger banks, which have their own reasons to change rates, but they could well be monitoring swaps very closely,” says Rachel Springall, of Moneyfacts.
“Savers may wish to act now to secure a top fixed-rate bond, as rates in this market can come and go very quickly.”
While a lower inflation will put less pressure on your finances, it’s still important not to leave your savings languishing in an account with a poor rate.
The average easy-access account pays around 3.18pc, while the top easy-access rate on the market is 5.16pc from Paragon Bank, with its Double Access saver account, according to market analysts MoneyFacts.
Punjab National Bank is paying among the lowest returns, with its savings account offering 0.75pc. A saver with £50,000 in this account will earn around £376.29 a year in interest. Moving the deposit to the best buy account would yield £2,641.90 a year, an extra £2,265.61.
To get a better deal, savers can opt to put their money into longer-term fixed-rate savings bonds.
The top one-year bond from Mizrahi Bank pays 5.22pc. A saver who puts £50,000 in the top account would earn £2,673.36 interest a year.
Use our calculator below to find out how much interest you’d earn from a lump sum or regular monthly payments.
To help you get the most out of your savings, The Telegraph has compiled the best rates available on the market right now for bonds, savings accounts, Isas and current accounts.
The best bond rates for 2024
One-year fixed rate
Mizrahi Bank via Flagstone 1 Year Fixed Term Deposit – 5.22pc
You can save between £10,000 and £1m. Interest is paid when the account matures. Can only be opened via Flagstone, a savings platform.
Two-year fixed rate
iFast Global Bank 2 Year Fixed Rate Bond – 5.1pc
The account can be opened with £1. Interest is paid on maturity.
Five-year fixed rate
UBL UK 5 Year Fixed Term Deposit – 4.52pc
You can save between £10,000 and £85,000. Interest is paid on maturity, compounded annually.
The best savings account rates for 2024
Easy-access savings account
Paragon Bank Double Access Savings Account – 5.16pc
You can save between £1,000 to £500,000. Interest is paid annually, and can be paid away or compounded.
You can make up to two penalty-free withdrawals per year. Any further withdrawals will result in the interest rate reducing to 1.5pc.
Regular savings account
First Direct Regular Saver Account – 7.00pc
This account has a 12-month term and can be opened with just £25. You must pay in between £25 and £300 a month. Withdrawals are not permitted. Interest is paid on maturity. Only for those with a First Direct current account.
Notice savings account
Market Harborough Building Society 195 Day Notice Account – 5.45pc
You can save between £10,000 and £500,000. You must give 195 days’ notice before making a withdrawal or closing the account. Interest is paid annually.
The best current account rates for 2024
Nationwide FlexDirect Current Account – 5pc (up to £1,500)
You must pay at least £1,000 a month to earn interest.
The best Isa rates for 2024
Moneybox Cash Isa – 5.09pc
Savers must deposit at least £500 to open the account. Interest is paid annually and must be compounded.
The interest rate will fall to 4.15pc after the first 12 months.
One-year fixed rate
Virgin Money 1-Year Fixed-Rate Cash Isa – 5.25pc
The Isa has a minimum deposit requirement of £1. Interest is paid on maturity.
Two-year fixed rate
UBL UK 2-Year Fixed-Rate Cash Isa– 4.68pc
The minimum deposit is £2,000. Interest is paid on maturity and must be paid away. Earlier access is subject to a 180-day loss of interest.
Five-year fixed rate
UBL UK 5-Year Fixed-Term Isa – 4.16pc
Account can be opened with £2,000. Early access will result in a 365-day interest charge on the amount being withdrawn.
What is the difference between an Isa, bond, savings and a current account?
A current account is a transactional account that typically pays no interest but gives you a lot of flexibility in how often you access your money.
With a savings account, the bank pays you interest for keeping your money and therefore imposes some restrictions on how many withdrawals you can make.
A fixed-rate bond is a savings account with a fixed term, usually between one and five years. Until the duration of the bond is up, you cannot withdraw your funds, but in exchange for the commitment you will typically benefit from a higher rate.
The difference between an Isa and other savings accounts is that there is no tax charged on the interest. Everyone can save up to £20,000 a year tax-free in an Isa.
How to choose the right account for you
The first thing to consider is whether you might need access to the funds in an emergency. A current account or an easy-access savings account will give you this flexibility.
However, you will get a higher rate if you are willing to lock away your funds for a set period (for example, in a bond). Generally, the longer the period, the higher the rate – however, this is not the case at the moment. Fixed-rate accounts with one and two-year terms are far higher than those with five-year rates.
The other thing to consider is whether you are at risk of exceeding your personal savings allowance. This is £1,000 for a basic-rate taxpayer and £500 for a higher-rate taxpayer. If you earn more than this in interest outside of an Isa, then you will have to pay income tax.
Use our calculator to work out whether you could breach your allowance, and if you should get an Isa.