The eleven savings accounts with the best interest rates for 2023

Best savings accounts

Rising interest rates are good news for savers, who until recently earned next to nothing on the money sitting in their bank accounts.

The Bank of England has raised rates to 4.25pc, but with inflation still in double digits it is vital you find the very best deal to protect your cash.

Savers with £50,000 can bump up their returns by as much as £1,425 per year by switching from a big high street bank to a lesser-known challenger bank that offers higher rates.

The average easy access account at a large high street bank pays 1.63pc, while the top rate on the market is 3.4pc from Chip, according to the analyst Savings Champion.

Barclays is paying the lowest returns, with its Everyday Saver offering 0.55pc on deposits of £50,000. A saver with £50,000 in one of these accounts will earn £275 a year in interest. Moving the deposit to the best buy account would yield £1,700 a year, an extra £1,425.

“By leaving your money languishing with a big high street bank, you’re rewarding their bad behaviour,” says Anna Bowes, of Savings Champion.

She says banks can deposit their excess savings with the Bank of England and earn 4.25pc, which gives them big profit margins if they are only paying 0.55pc to their customers.

“Make sure you look after your own cash and make it work as hard as possible for you,” she says.

To get a better deal, savers can opt to put their money into longer-term fixed-rate savings bonds, which are now paying out interest in excess of 4pc a year, guaranteeing returns only provided by the stock market in recent memory.

The top one-year bond from Al Rayan Bank pays 4.5pc. Among the seven biggest high street banks, Santander offers the lowest rate, at 2.8pc. This is followed by Barclays, which has a one-year bond paying 3.4pc.

A saver who puts £50,000 in the top account would earn £2,250 a year, compared with £1,400 in Santander’s 1 Year Fixed Term Bond. By switching, savers can boost their yields by £850.

To help you get the most out of your savings, the Telegraph has compiled the best rates available on the market right now for Isas, bonds, savings and current accounts.

What is the difference between an Isa, bond, savings and a current account?

A current account is a transactional account that typically pays no interest but gives you a lot of flexibility in how often you access your money. With a savings account the bank pays you interest for keeping your money and therefore imposes some restrictions on how many withdrawals you can make.

A fixed-rate bond is a savings account with a fixed term, usually between one and five years. Until the duration of the bond is up, you cannot withdraw your funds, but in exchange for the commitment you will typically benefit from a higher rate.

The difference between an Isa and other savings accounts is there is no tax charged on the interest. Everyone can save up to £20,000 a year tax-free in an Isa.

How to choose the right account for you

The first thing to consider is whether you might need access to the funds in an emergency.  A current account or an easy access savings account will give you this flexibility.

However, you will get a higher rate if you are willing to lock away your funds for a set period (for example, in a bond). Generally, the longer the period, the higher the rate.

The other thing to consider is whether you are at risk of exceeding your personal savings allowance. This is £1,000 for a basic-rate taxpayer and £500 for a higher-rate taxpayer. If you earn more than this in interest outside of an Isa, then you will have to pay income tax.

Use our calculator to work out whether you could breach your allowance and if you should get an Isa.

The best Isa rates for 2023

Easy access 

Furness Building Society 45 Day Notice Cash Isa – 3.3pc

Interest is paid annually on December 31.

One-year fixed rate 

Santander 1 Year Fixed Rate Isa – 4.15pc

The minimum deposit is £500. You can only access your funds when closing the account and you would lose 120 days’ of interest. Transfers in are allowed. Interest is paid on maturity. There is a £50 e-voucher if you transfer in an Isa worth £10,000 or more from another bank.

Two-year fixed rate

Santander 2 Year Fixed Rate Isa – 4.25pc

The minimum deposit is £500. You can only access your funds when closing the account and you would lose 120 days’ of interest. Transfers in are allowed. Interest is paid on maturity. There is a £50 e-voucher if you transfer in an Isa worth £10,000 or more from another bank

Five-year fixed rate

United Trust Bank Cash Isa 5 Year Bond – 4.05pc

You need a minimum of £15,000 to open an account. You can make withdrawals subject to a deduction. The penalty is calculated by multiplying the amount of the withdrawal by the number of days left until maturity, and multiplying that by the interest rate; the figure is then divided by 365. Interest is paid annually.

The best bond rates for 2023

One-year fixed rate

Al Rayan Bank 12 Month Fixed Term Deposit – 4.5pc

You can save between £5,000 and £1m. Interest is paid quarterly.

Two-year fixed rate

Cynergy Bank 2 Year Fixed Rate Bond – 4.5pc

You can save between £10,000 and £1m. Interest is paid annually.

Five-year fixed rate

Tandem Bank 5 Year Fixed Term Deposit (via Raisin UK) – 4.6pc

You can save between £1,000 and £85,000. Interest is paid on maturity.

The best savings account rates for 2023

Easy-access savings account

Chip Instant Access Account – 3.4pc

You can save up to £250,000.

Regular savings account 

First Direct Regular Saver Account – 7.00pc

You have to make a minimum deposit of £25 a month for one year. However, the maximum amount you can save each month is just £300.

Notice savings account

Cynergy Bank Online Notice Saver – 120 Day Notice – 3.65pc

You must give 120 days’ notice before making a withdrawal. Interest is paid annually.

The best current account rates for 2023

Nationwide FlexDirect Current Account – 5pc (up to £1,500)

You must pay in £1,000 a month to earn interest.

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