Top savings rates: the best inflation-beating savings and current accounts

Top savings rates: the best inflation-beating savings and current accounts

With inflation dropping, you can now secure an inflation-beating return on your savings. But new research shows you won't get a decent return unless you actively move your money.

lovemoney staff

Savings and ISAs

lovemoney staff
Updated on 21 November 2023

The latest inflation figures offer some respite to savers.

For the last couple of years, inflation has been so persistently high that it has been virtually impossible for savers to earn a real-term return on their cash.

After all, if your savings aren’t growing at a rate above inflation then even as the balance increases in size, the actual value of those savings will fall.

Thankfully inflation has now dropped, with the ConsumerPprices Index (CPI) measurement falling to 4.6% in the year to October.

That’s not just meant that the Government has hit its target of halving inflation this year, but also opened the chance for savers to get an inflation-beating return for the first time in almost two years.

Manage all your savings accounts in one place with Raisin, the simple savings service

Why you need to move your savings

Unfortunately, it’s not just the persistently high rate of inflation that has punished savers, but also our approach to moving our money.

In far too many cases savers are apathetic about shopping around for a new deal, taking it for granted that the money we set aside will get a respectable return.

As we have pointed out before at loveMONEY, that simply doesn’t happen.

The scale of this apathy is pretty concerning too.

Analysis from Hargreaves Lansdown found that more than a quarter of people have never switched savings deals for a better rate, while almost half (49%) have no plans to switch at any point. 

This can really punish your savings pot. Hargreaves reckons that there’s currently around £257.8 billion held in savings accounts paying zero interest, and so missing out on around £13.6 billion a year in interest.

That’s a lot of cash being thrown away, emphasising the importance of shopping around and finding the best possible return on your cash.

Why you need to move quickly

It’s also important to recognise that time is of the essence here. The fact that inflation is dropping likely signals the end of Base Rate increases from the Bank of England.

After all, inflation has been the primary driver for Base Rate being increased to 5.25% at this point, meaning that it’s only likely to drop from here.

Given this, interest rates on savings accounts are likely to fall too, so if you are thinking of locking your money away for a while it’s important to move now rather than delay.

So let’s take a look at how you can beat inflation at the moment.

The best easy access savings accounts

Let’s start with easy access accounts, since the first goal for any saver is building some money they can turn to in the event of an emergency.

Right now you can secure a rate of 5.22% on easy access with Metro Bank, so long as you have at least £500 in order to open the account.

As always, it’s worth taking a close look at the terms and conditions, since the rate will drop after 12 months, making it important to move the money elsewhere in a year’s time.

There’s a few other providers paying 5.15%, but be warned they tend to limit the number of withdrawals you can make in a year.

Providers include Skipton Building Society and Earl Shilton Building Society.

Manage all your savings accounts in one place with Raisin, the simple savings service

The best regular savers

Another important option comes in the form of regular savers.

These accounts reward savers who put aside a certain amount each month, which tends to be capped at around £250-£300.

In return, you get a decent interest rate.

These accounts are great if you are just getting into the savings habit and want to build a safety net.

The top rate at the moment comes from Nationwide Building Society, paying 8%, though bear in mind that you will need to have a Nationwide current account in order to qualify. In terms of accounts open to everyone, you can get 5.75% from Saffron Building Society.

Best notice accounts

If you have to provide a little bit of notice before getting your hands on the money held in your savings, you can pick up a better rate of interest.

You can bag a rate of 5.59% with a notice account from Oxbury Bank, though you will need to give 180 days' notice before withdrawing cash.

You will also need at least £1,000 to open the account.

Best fixed-rate accounts

Traditionally, the longer you lock your money up in a fixed-rate savings deal, the higher the rate of interest on offer.

That hasn’t been the case of late though, with the very best rates paid on bonds where the money is only locked up for a shorter period.

In other words, you get a better return from a one-year fixed rate bond rather than a five-year fixed rate bond, essentially because of that expectation of rates starting to fall from next year.

For example, right now savers can pocket a rate of 5.91% from Metro Bank on a one-year bond, with a minimum deposit of £500.

Best cash ISAs

Making use of your ISA allowance has become increasingly important over the last year, as the interest rates paid on savings deals have rocketed.

These increases have meant far more savers have to pay tax on their returns, unless they are kept within an ISA wrapper. 

If you are looking to maintain easy access to your savings, then you can get a rate of up to 5.11% from Metro Bank, which includes a 3.46% bonus for the first 12 months.

You can open this account with just £1.

Savers can get an even bigger rate with an ISA fixed rate account, with the one-year term once again delivering the highest rate.

Virgin Money pays 5.85% on its one-year fixed rate cash ISA, which you can open with only £1.

Don’t forget current accounts

You can even land an inflation-beating return through your bank account. 

With Barclays, if you open a bank account and join its Blue Rewards scheme, then you can secure a rate of 5.12% on balances of up to £5,000.

Most Recent