Despite the Bank of England cutting interest rates, there are still savings accounts offering returns well above inflation, which currently stands at 2.5%. The best cash ISAs now pay more than most standard easy-access accounts, with tax-free interest on deposits up to £20,000 per tax year.
Savers should be aware of the personal savings allowance: £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers, with no allowance for additional-rate taxpayers. Interest earned above these limits may be taxable. All accounts should be covered by the Financial Services Compensation Scheme (FSCS) protecting up to £85,000.
Easy-access accounts offer flexibility, but some limit withdrawals. For Santander Edge current account holders, the linked Edge Saver pays 6% on up to £4,000 (including a 1.5% bonus for 12 months). Monument Bank offers 4.52% via Raisin. New Chase customers can get a boosted 5% for a limited time, though Chase's standard rate tracks 1.25% below the Bank of England base rate, dropping to 1.5% below from February 19.
Regular savings accounts often require monthly deposits and may restrict withdrawals, but offer higher rates. Notice accounts require advance notice for withdrawals, while fixed-rate accounts lock your money for a set term. ISAs remain a tax-efficient option, though better rates may be found elsewhere.
MoneySavingExpert.com warns that rates are declining after the Bank of England cut its base rate from 5.25% to 4.75%. Savers should act quickly to secure the best deals before they disappear.
