Looking for a home for your savings?
You'll no doubt be aware that savings rates have been... uninspiring for many years now.
However, things are slowly improving and, by using your cash to earn juicy bank bonuses along with top interest rates, you can achieve a truly impressive return.
Think about how much hassle you want
How much you can earn depends on how much effort you're willing (or able) to put in.
After all, not everyone has a lot of time on their hands or simply has more important things to get on with.
As a result, we've come up with three separate strategies, ranging from the easiest (but least profitable) to the most time-consuming.
For each, we've assumed a savings pot of £5,000 and a timeframe of one year.
All options have a guaranteed return and your money is protected by the Financial Services Compensation Scheme, or equivalent schemes abroad.
Easy win: put your money in a fixed-term savings account
Interest earned: £100.50 (at 2.01%)
SmartSave, which was created by British bank Chetwood Financial, offers a one-year fixed bond (at the time of writing) of 2.01%, meaning can beat inflation with a minimum of fuss.
You can set up an account online in as little as 10 minutes.
You should note any money will be transferred to your nominated account on the next working day after your maturity date if you don't select another option.
You can also compare other savings accounts if this account is not for you.
You can get a higher interest rate with the Bank of London and the Middle East (2.2%), but as this is a shariah bond it isn't 100% guaranteed as it is an expected profit rate.
If you’re happy to put in a bit more effort for a higher guaranteed return, read on.
Set aside an hour: switch to HSBC Advance and get £175
Equivalent interest rate earned: 3.5%
This involves switching bank accounts, so it takes more time than simply opening a savings account as per the above example, but it does offer a far greater reward.
If you switch your current account (and two Direct Debits or Standing Orders) to HSBC Advance* via the Current Account Switch Service, you will get £175.
It’s easy money as there is no monthly account fee, but you'll undergo a credit check.
You can also benefit from HSBC’s Regular Saver offering 5% interest, exclusive access to discounts, and a free 12 months British Cycling Fan membership.
You need to pay in at least £1,750 a month or a minimum of £10,500 every six months.
This shouldn’t be a problem if you earn the UK average of £29,588 a year (according to Office for National Statistics data).
Do you want to earn even a higher return?
You can if you’re prepared to put in the legwork…
Top return: HSBC Advance/Regular Saver, Nationwide FlexDirect and Marcus
Equivalent interest rate earned: 7.7%
Getting the very best guaranteed return requires some preparation and effectively involves a combined approach of the two strategies above; grabbing top savings rates while taking advantage of numerous bank account perks.
First, you need to open an HSBC Advance* account to get £175 as a switching reward. As we mentioned before, this option needs two Direct Debits or Standing Orders.
Then you can open a Nationwide FlexDirect account with a leading rate of 5% for balances of up to £2,500 in the first 12 months – before the rate drops to 1% variable.
You can put half of your £5,000 – £2,500 – into the Nationwide FlexDirect account straight away, which should give you £125 in interest over the year.
The catch is that you need to pay is at least £1,000 a month into the Nationwide account to qualify for this rate.
You could meet this rule by setting up two Standing Orders.
One will take £1,000 from your main HSBC account (where your salary is paid) to your Nationwide account, while another Standing Order (set up a few days later) will send that £1,000 back to HSBC.
You should note this option involves two credit checks in a short space of time, which could negatively impact your credit score, although bank switches generally have a minimal impact.
Don’t forget HSBC has a generous 5% Regular Saver, which you can top up by up to £250 every month.
Unfortunately, you need to stop your cash from losing value over the year while you drip feed it into that account, so you need to put the other £2,500 into a Marcus account with 1.5% interest rate for one year.
You can then use your £2,500 in the Marcus account to drip feed money every month into the HSBC Regular Saver, which earns 5%.
If you do this, you will earn around £17 in interest from the Marcus account and £69 from the HSBC Regular Saver over the year.
While this is a lot of work to do to maximise your return, it should pay off as you will end up with £386 in interest – equivalent to a 7.7% return.
*Note, we've read reports of some customers being rejected for the HSBC Advance account, but for the sake of this article we've had to assume all will go well with your switch. If you are unsuccessful, wait a while then view the best alternative accounts for switching bonuses.