The best instant access savings accounts

by lovemoney staff on 20 May 2013  |  2 comments
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Instant access accounts mean you can get your hands on your money easily, but many rely on big bonuses to boost the initial rate of interest. Here are the top ones right now.

It’s hard to know where to put your savings to get the best return on your money at the moment.

Savers have been suffering from the effects of the record low base rate for a few years now, but locking up your cash to get a decent rate is not a sacrifice many are willing to make with such an uncertain economy.

The trusty instant access savings account could be your best bet if you need your cash in a hurry and have reached your Cash ISA limit (currently £5,640).

But even rates on these accounts have been falling recently, due in part to the Government's Funding for Lending scheme meaning banks and building societies are less dependent on raising cash by attracting savers.

Therefore it's worth looking at the whole of the savings market before you open an account as you could get a higher rate in a fixed-rate savings account – if you're happy with having your money locked away.

With an instant access savings account, you can add to your savings pot and (usually) withdraw the money at any time. Because of this flexibility banks typically offer lower rates compared to fixed-rate accounts, but you still get a better return than if you did nothing.

Bonuses

When it comes to instant access saving, you can either go for an account with a bonus, which boosts your interest rate (usually for about a year), or opt for a gimmick-free account with no bonus, just an upfront interest rate.

The bonus rate makes the advertised offer look that little bit juicier. But as soon as the period is up banks will revert dump you onto a far less attractive rate.

It's not a problem if you are happy to shop around and switch accounts regularly but if you can't be bothered, then an instant access savings account with no bonus is a better option.

Top instant access accounts with a bonus

So there are no accounts that break through the 2% mark -  most pay well below this threshold.

Even with the top rate of 1.70% you won’t beat inflation (the Consumer Prices Index stands at 2.8% currently), so putting your cash in this account means you’re effectively losing money.

It’s also worth noting that two of the accounts above actually limit your access to your cash.

Top instant access accounts without a bonus

*You must have a Nationwide current account and be registered for online banking to open.

**Account requires at least one direct pension credit to be paid into the account each month.

The main benefit of opening an account without a bonus is knowing that 12 months down the line you're unlikely to see your interest rate plummet. However, your interest rate could be cut anyway as they are variable, so make sure you keep an eye on your account.

Current account alternatives

At the moment some of the best rates on easy access savings can actually be found in a current account.

The Nationwide FlexDirect Current Account pays 5% on balances up to £2,500 for 12 months.

While the Santander 123 Current Account pays 3% in-credit interest on balances between £3,000 and £20,000.

Elsewhere the Lloyds Current Account with Vantage pays 3% on balances between £3,000 and £5,000.

Read: Why some current accounts are better than savings accounts for more.

This article is regularly updated to reflect the latest rates

More on savings:

Compare savings accounts

The best regular savings accounts

The top fixed rate savings bonds

The UK's best Cash ISAs

Nationwide current account pays market-leading 5% interest