Savers can now earn up to 5.12% on their spare cash as banks increase rates following the Bank of England's base rate rise to 2.25%. However, with inflation at 10.1%, the real value of savings is still eroding.
Easy-access accounts offer flexibility but lower rates, while fixed-rate accounts provide better returns but restrict access to funds until the term ends. Notice accounts require advance notice for withdrawals.
Top easy-access deals include Barclays' Rainy Day Saver at 5.12% (up to £5,000, existing customers only) and Nationwide's FlexDirect current account at 5% for one year (up to £1,500, £1,000 monthly deposit required). HSBC's Online Bonus offers 3% but drops to 0.5% on months with withdrawals.
When choosing an account, ensure the provider is covered by the Financial Services Compensation Scheme (FSCS) protecting up to £85,000. Basic-rate taxpayers have a personal savings allowance of £1,000 tax-free per year.
One in three savers are dipping into savings more than six months ago, while one in six are saving more for emergencies, according to Fidelity.
