The best savings accounts for monthly interest


Updated on 12 April 2019 | 3 Comments

Want to generate an income from your savings? Take a look at the best easy access, notice, Cash ISAs, fixed rate bonds and current accounts which pay monthly interest.

If you have a decent lump sum of savings, you can use it to generate an income by going for an account that offers monthly interest.

Instead of interest being paid annually and compounded, these accounts allow you to transfer the interest that your savings earn each month into a nominated bank account. So you can spend what your pot earns without chipping away at your capital.

However, not all savings accounts come with a monthly interest option. We’ve rounded up the best deals on easy access, notice, fixed-rate bonds and Cash ISAs as well as on current accounts and peer-to-peer websites.

You should bear in mind that these accounts are great if you are only interested in monthly income. To get the very best return on your money make sure you check out the best rates in Where to earn most interest on your cash.

Compare savings accounts, ISAs and P2P investments (capital at risk) on loveMONEY's comparison site

Maximum saving limits

The past year has seen many banks include their saving limits, from around £250,000 to £1 million.

This is good news for savers with large nest eggs, such as those in retirement.

However, there's a very good reason you shouldn't put £1 million into a savings account, however good.

Unfortunately, the Financial Services Compensation Scheme only covers you up to £85,000 per banking group.

There's no rule against putting in more money, but to be safe you might want to spread your savings between several banking groups. 

Who owns my bank? Our full guide to FSCS protection

Easy access accounts

With an easy access account, you don’t have to lock up your money. Here are the best easy access accounts that offer a monthly interest option.

Account

Interest rate AER

Minimum deposit

Maximum deposit

Kent Reliance - Online only easy access account

1.50%

£1,000

£1,000,0000

Virgin Double Take E-Saver

1.50%

£1

£250,000

Notice accounts

With a notice account you will need to give advance warning before you withdraw any of your savings. This sacrifice usually means you get a slightly better rate compared to an easy access deal.

Here are the best rates you can get with notice accounts that have an option to pay monthly.

Account

Notice period

Interest rate AER

Minimum deposit

Maximum deposit

Secure Trust Bank 90 Day Notice Account* 90 days 1.90% £1,000 £1,000,000

Charter Savings Bank 95-Day 

95 days

1.90%

£5,000

£100,000

Gatehouse Bank 120 Day Notice Account

 

120 days

1.87%**

£1,000

£1,000,000

*income paid quarterly, not monthly

**expected profit rate

Current accounts

Some current accounts pay decent levels of interest on deposits and pay out monthly too.

With the Nationwide FlexDirect account, you can earn 5% interest on balances up to £2,500 for 12 months as long as you pay in £1,000 a month.

Or there’s the TSB Classic Plus account which also pays 3% but only on balances up to £1,500. The good thing about this account is the rate won’t drop away after a year.

Fixed rate bonds

Fixed rate bonds pay a set amount of interest, but you will have to lock up your capital for one or more years to get access to the rate.

Here are the best deals over one, two, three and five years if you are looking for a monthly interest option.

One-year fixed rate bonds

Account

Interest rate AER

Minimum deposit

Maximum deposit

Kent Reliance 1 Year Fixed Rate Bond

 

2%

£1,000

£1,000,000

Metro Bank Fixed Term Savings Account

 

2%

£500

£2,000,000

Two-year fixed rate bonds

Account

Interest rate AER

Minimum deposit

Maximum deposit

Aldermore 2 Year Fixed Rate Account

2.25% £1,000 £1,000,000

Axis Bank Fixed Deposit Account

2.24%

£1,000

£200,000

Three-year fixed rate bonds

Account

Interest rate AER

Minimum deposit

Maximum deposit

Aldermore 3 Year Fixed Rate Account

 

2.40%

£1,000

£1,000,000

ICICI Bank UK HiSAVE Fixed Rate Account

2.40% £1,000 N/A

Five- year and beyond fixed rate bonds

Account

Interest rate AER

Minimum deposit

Maximum deposit

 

Secure Trust Bank 7 Year Fixed Rate Bond

 

2.65%

£1,000

£1,000,000

Secure Trust Bank 5 Year Fixed Rate Bond

2.60%

£1,000

£1,000,000

Cash ISAs

With a Cash ISA you earn interest on your cash tax-free. You can save up to £20,000 in 2019/20. Here are the best deals across easy access and fixed rate bonds that offer to pay interest monthly.

Easy Access Cash ISAs

Account

Interest rate AER

Minimum deposit

Maximum deposit

 

Kent Reliance Cash ISA - Easy Access

 

1.46%

£1,000

£20,000 plus transfers

Coventry BS Easy Access ISA (Online)

 

1.45%

£1

£20,000 plus transfers

One-year fixed rate Cash ISA

Account

Interest rate AER

Minimum deposit

Maximum deposit

Kent Reliance Cash ISA 1 Year Fixed Rate

1.80%

£1,000

£20,000 plus transfers

Charter Savings Bank 1 Year Fixed Rate Cash ISA

 

1.75%

£5,000

£20,000 plus transfers

Two-year fixed rate Cash ISA

Account

Interest rate AER

Minimum deposit

Maximum deposit

Charter Savings Bank 2 Year Fixed Rate Cash ISA 1.95% £5,000 £20,000 plus transfers

Kent Reliance Cash ISA 2 Year Fixed Rate

1.90%

£1,000

£20,000 plus transfers

Three-year fixed rate Cash ISA

Account

Interest rate AER

Minimum deposit

Maximum deposit

Charter Savings Bank 3 Year Fixed Rate Cash ISA

2.05%

£5,000

£20,000 plus transfers

Shawbrook Bank Three-Year Fixed Rate Cash ISA

1.96%

£1,000

£20,000 plus transfers

Five-year fixed rate Cash ISA

Account

Interest rate AER

Minimum deposit

Maximum deposit

Shawbrook Bank Five-Year Fixed Rate Cash ISA

2.30%

£1,000

£20,000 plus transfers

Newcastle BS Five Year Fixed Rate ISA

 

2.10%

£500

£20,000 plus transfers

Compare savings accounts, ISAs and P2P investments (capital at risk) on loveMONEY's comparison site

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