Regardless of what your purpose is for saving – for a house, holiday, or as a cushion to cover unexpected expenses – you’ll want to make sure your money is working as efficiently as it can.
Finding an account with a more competitive interest rate can save you a lot of money in the long run.
For instance, the Punjab National Bank is making among the lowest returns, with its savings account offering 0.75%. A person with £50,000 in this account will earn approximately £376.29 a year in interest. If this deposit were to be transferred to the best easy access account from Atom Bank, which pays 4.85%, it would result in an income of £2,479.64 a year, a gain of £2,103.35 extra.
To help you stay on top of your savings, The Telegraph has gathered the most competitive rates currently available in the market for bonds, savings accounts, ISAs and current accounts, using data provided by Moneyfacts.
In this article, we will be discussing:
- The best fixed-rate bonds
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- The best Isa rates
- Choosing the Right Account for Your Needs
A savings account is a type of bank or building society account which allows you to put money aside for later use. In return, you earn a small amount of interest on your deposit, and your money is kept safe and secure.
Unlike a current account, which you'll use to settle your bills and for daily expenses, a savings account is intended to be the place where you can put your extra cash, where it will hopefully accumulate over time.
There are a variety of savings accounts available – some have rates that can fluctuate as needed, whereas others demand you to agree to tying up your funds for a set period of time.
In theory, the more hassle an account is to manage, the more interest you should earn – but this isn't always true.
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Fixed-rate bonds typically offer the highest returns, but you can currently get similar rates with a few types of variable accounts, such as the top-rate easy-access account, albeit by a very small margin.
People who are saving money need to decide whether to take a fixed-rate deal to get a guaranteed interest rate for a longer time, or take a risk on a variable-rate and hope that the interest rate doesn't drop soon.
We have evaluated the leading bond accounts for different fixed-term periods:
One-year fixed rate
Vida Savings 1 Year Fixed Deposit - 4.77%
To open the account, you'll need to pay a minimum deposit of £100. You have the option to have interest paid either monthly or annually.
Two-year fixed rate
Tandem Bank 2 Year Fixed Rate Account - 4.65%
The account requires only £1 to be opened. Interest is paid on the anniversary of the account each year.
Five-year fixed rate
SmartSave 5 Year Fixed Rate Account – 4.5%
You must save at least £10,000 in this account. Interest is paid on the account maturing.
The top variable savings account rates for 2025.
Accounts that earn a variable rate of interest typically offer more flexibility compared to fixed-rate deals; often, you can make as many withdrawals as you want without your interest being affected, but some arrangements have their own restrictions in place.
In general, easy access accounts allow you to take out money as and when you need it; regular saver accounts require you to put money in at regular intervals; notice accounts let you take out money, but only if you give your bank a specific amount of notice beforehand.
Easy-access savings account
Savings account with enhanced interest rate – 5%
New customers with a Chase current account can benefit from 5pc interest for six months on a Chase Saver with a boosted rate account. However, this must be opened within the initial 31 days of opening a Chase account and this provides a 1.5pc bonus on top of the standard interest rate – currently 5pc.
For a regular account with no bonus, the highest interest rate is provided by Atom Bank, at 4.85%.
You can open an account with just £1. The advertised interest rate applies if you don't make any withdrawals for the month; if you do withdraw money, the interest rate drops to 3.25pc for that month.
Principality Building Society Regular Saver Account – 8%
This account has a six-month term and can be set up with just £1. You can pay in up to £200 a month, and no withdrawals are allowed during the term of six months. Interest is paid when the term matures.
Notice savings account
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Minimum deposit is £10,000. A 90 day notice period applies before withdrawals or account closure. Interest is paid quarterly.
Best current account rates for 2025.
In some instances, current accounts will pay interest on the balance held, which can be beneficial if you prefer not to have the inconvenience of transferring funds between multiple accounts.
We've discovered that Nationwide offers the current account with the highest interest rate.
Nationwide FlexDirect Current Account – 5% AER
Interest is rewarded on balances of up to £1,500, and this benefit is limited to the first 12 months. You must also deposit a minimum of £1,000 per month into the account.
The top Inland Savings Account rates for 2025
They function in a similar manner to regular savings accounts but have a vital difference - the interest you accumulate is completely free from tax - and you can only deposit up to £20,000 per tax year.
Easy-access cash Isa
Moneybox Cash ISA – 5%
Savers can open this account with £500 and interest is paid on an annual basis on the account's anniversary.
One-year fixed rate
Shawbrook Bank 1-Year Fixed Rate Cash ISA - 4.53pc
The account must be funded with £1,000 to open it. Interest is paid when the bond reaches its maturity date.
Two-year fixed rate
This account, Hodge Bank 2-Year Fixed-Rate Cash Isa, offers an interest rate of 4.43pc.
The minimum deposit required is £1,000." Interest is paid each year on the date of the account's anniversary."
Three-year fixed rate
Hodge Bank 3-Year Fixed Rate Cash ISA – 4.37pc
The account can be opened with £1,000. Interest is paid once a year on the anniversary of the account.
What is occurring with regards to savings rates?
Around three quarters of savings accounts are offering returns that outstrip the rate of inflation, which stood at 2.6pc for November, up from 2.3pc in October, according to the latest statistics from the Office for National Statistics.
Savings rates have been steadily falling since the Bank Rate peaked at 5.25% last summer, and the latest reduction to bring it down to 4.75% in November is accelerating the decline.
Consequently, anyone seeking a more rewarding account may need to act swiftly as the most competitive rates have a tendency not to remain available for long.
Alice Haine, of online investment platform Bestinvest by Evelyn Partners, says: "For now, the best savings rates are outperforming inflation, giving saving savers with top rate deals a healthy real return on their nest eggs. Securing the top-rate now before the top deals vanish could be a prudent strategy for those with cash sitting in underperforming accounts to guarantee their money is working as productively as possible."
Use our calculator to see how much your savings account is earning you – and how much extra interest you could earn if you switch.
What is the difference between an Individual Savings Account (ISA), a bond, a savings account, and a current account?
A current account is a day-to-day account which usually doesn't earn any interest, but allows you to have easy access to your money.
With a savings account, the bank will pay you interest for holding onto your money, but it will also come with some limitations on the number of withdrawal transactions you can make.
A fixed-rate bond is a type of savings account that is locked away for a set period, generally between one and five years. Until the end of its term, the funds cannot be withdrawn, but you will typically benefit from a higher interest rate in exchange for this commitment.
The distinction with an Isa and other savings accounts is that there is no tax levied on the interest. Everybody can put away up to £20,000 annually in an Isa without incurring tax.
Choosing the Right Account for You
First, consider whether you'll want to be able to get your hands on the money in an emergency. A current account or an easy-access savings account will provide you with this flexibility.
However, you may get a higher rate of interest if you're willing to set aside your funds for a specific amount of time (say, by investing in a bond). Usually, the longer the period, the higher the rate - though this isn't the case right now. Fixed-rate savings accounts with a one or two-year term are significantly higher than those with a five-year term.
When you're considering this, you also need to think about whether your interest earnings will push you over your personal savings allowance. For people who pay the standard rate of income tax, this allowance is £1,000, and for those who pay the higher rate, it's £500. If your total interest from sources outside an Isa exceeds this limit, you'll have to pay income tax on that amount.
to work out whether you could go over your allowance, and if you should get a tax-free individual savings account.
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