The world of savings is steadily becoming a brighter one. With the increase of the base interest rate, we can look to the positive, which is for those with a bit of money they can squirrel çƒv;l…away (it doesn’t have to be thousands), there are some great savings accounts out there to earn you some interest and actually help you build up your savings.
In this guide, we’re going to explore the best savings accounts available for September 2022 and give some helpful guidance on the difference between each account type and help you find the savings account for you.
It may seem a silly question, but in a society where many of us have been encouraged to spend, spend, spend and even take out multiple finance plans to buy more ‘stuff’ the idea of saving can seem a bit alien to us.
Saving anything is a great habit to get into, the saying ‘saving for a rainy day’ is quite a good rule to live by. If you’re able to put away a bit of money each month, if something happens, say your car breaks down, or you need a new boiler, that money is there ready to help you out of that situation, without putting yourself into debt.
Many people might not even realise they’re in debt. If you have money outstanding on a credit card, if you have a monthly payment plan (even if it’s at 0% interest) for a car, kitchen, or games console, then you have debt, as you owe a company money.
The only time it’s not in your best interest to save, is when you have debts that are costing you more in interest than your savings are making you. In this situation, it can be better to use the money you have to reduce your debts and lower the interest you’re being charged on them, eventually getting you out of debt and back into the world of savings!
As many of us are aware, as much as our savings account interest rates are going up (slowly but surely), the rate of inflation and so the cost of living is also on the rise (and at a faster pace). The government is looking into ways to prevent the crippling cost of living from rising to ridiculous amounts, but are there ways we can try to combat the hit we are getting in the current situation?
By finding the best savings accounts for your needs and saving ability, the additional money you make in interest can be used to counteract the rising costs associated with the rate of inflation and cost of living.
This isn’t exactly the savings most people have in mind, we think of savings to get us away on holiday, buy that car or try to save for a mortgage.
This is still something a lot of us can do, but the truth is in the current climate, our savings interests are only balancing out the cost of day-to-day life. This is still good as it keeps us out of debt, but there may be some better options for you.
You can save with banks and building societies. The difference between the two is that a building society is traditionally owned by its members, who are the people who bank with them. Banks are owned by their shareholders and can heavily depend on their place in the stock market.
In the past building societies haven’t had the product range that banks have, however, their interest rates have quite often been higher than those available through a bank. Making their differences seem like swings and roundabouts.
The main thing to remember when choosing a savings account isn’t whether it’s a building society or bank, but more about the best savings accounts for you. This can be based on the amount you can save, whether this is regular or sporadic, if you may need to access the account quickly, or if you’re able to work with an account where you need to give notice to withdraw.
The first place most of us will look to when it comes to finding the best savings account is the amount of interest the account will apply to our savings. The obvious answer is the higher the interest, the better, as this will make us more money each month or year depending on how often the interest is accrued and applied to the account.
However, having the highest interest doesn’t mean it’s one of the best savings accounts for you. There are many factors to consider before committing yourself (and your money) to a savings account.
Saving regularly means putting an amount of money into your savings account every month. It may be as little as £10 or it could be a minimum of £250.
Knowing your financial situation will help you to decide if a regular savings account is both doable and best for you at this current time. One way to look at this is to write down all your income, and all your outgoings, then see how much money you have left after all your outgoings have gone out each month.
If you can comfortably put away an amount from what is leftover whilst allowing for unexpected costs, such as new school shoes, or replacing broken appliances at home, then take that amount and see which of the higher interest accounts will allow for that to be your regular saving amount.
NB – some of the higher interest regular savings accounts require you to have an existing account or mortgage with that bank or building society. Those open to all have a slightly lower interest rate.
If you can’t commit to a regular saving amount to gain access to the higher interest savings accounts, it’s not the end of your saving journey – pop to point 3 to discover why.
Remember, most regular savings accounts only offer that higher interest rate for one year, so be mindful of that and shop around each year to find the best place to put your money. There’s also no restriction on the number of accounts you can have (excluding ISAs – you can only pay into one per year, but you can have as many as you wish), so you can avoid the restriction of limited monthly deposits (if you have the spare cash) by opening multiple regular savings accounts.
Once you’ve worked out the amount you’re able to comfortably save each month and you’ve discovered which savings accounts are able to offer you a good rate of interest on your pounds, the next point to consider is whether you’re able to put that money away each month.
Knowing that you can leave it there for a period of anything from one month to a whole year, to accrue the most interest and maintain the account’s policies. It’s more common to find higher interest rate savings accounts have longer withdrawal notices.
This means that if you have an emergency, such as a broken boiler, you will have to request money from the bank or building society. This means it’s likely to have an agreed notice period (as specified above this can be anything from one month to one year depending on the provider) before that money is given to you.
These types of accounts aren’t great if you are saving for a rainy day, as the time it takes to get the money won’t enable you to fix something in an emergency. These types of accounts are the best savings accounts for people looking to save for a deposit for a mortgage, a big holiday planned for a couple of years’ time, or just a place to keep saving for your future.
If you don’t feel comfortable having your money available in the future, then an instant access savings account would probably be better for you, to ensure that when an unexpected event or you fancy treating yourself, you can access the money you’ve put away and deal with emergencies quickly and without having to look for other finance options.
If you’re unable to deposit a regular amount into a savings account, and you’re not able to lock away your money for prolonged periods of time, there are still accounts available to you. These typically give interest rates over 1%, without penalties for withdrawing your money when it’s needed.
When you’re just starting your savings journey, these types of accounts can be great as you can still set up regular payments but have 24/7 access – creating that good saving habit we spoke of at the beginning.
At the time of writing this in September 2022, these were found to be the best savings accounts available in the UK:
Yorkshire Building Society is offering 5% interest variable (which means it can go up and down) and you must have had a pre-existing account with them for at least 12 months prior to applying for this account. It’s a minimum monthly deposit of £10 up to £500 which is available for one year. Interest is accrued daily but applied annually and you can make one withdrawal per year.
Other good regular savings accounts for pre-existing customers had interest rates from 3.82% down to 2.5%, so check your current bank or building society to see if you have access to these higher interest rate accounts.
Saffron Building Society is offering 3% interest fixed for one year. The minimum monthly deposit is £1 with a maximum of £50, and you can make one withdrawal per month. Interest is accrued daily but applied annually.
A higher monthly deposit regular saver is Beehive Money, which allows for up to £500 deposit per month, however, the interest rate is 2.5% fixed until 31.10.23, and you cannot make any withdrawals until 1.11.23.
Remember you can have as many regular savings accounts as you like (only one per provider), so you could save in multiple banks or building societies with higher interest rates on lower monthly amounts to maximise the interest you make each year.
Investec Bank is offering 2.35% interest on a 90-day notice savings account. The account must have a minimum of £5000 invested to gain this interest (if falls below 0% will be earned), and a maximum amount of £250,000. Interest is calculated daily and paid monthly. You can withdraw money anytime but it will take 90 days to be paid to you.
For a lower opening balance, Zopa is offering 2.05% interest for a 31-day notice savings account, that can be opened with as little as £1 up to £85,000.
If you want to avoid the variable rate and reduce the risk of being stuck with a regular saver that started out at a high-interest rate but has plummeted, a fixed rate saver could be for you.
Virgin Money is offering a one-year fixed rate savings account at 3.32% interest, it’s a one-off deposit from £1 to £1M, however, you cannot make any other deposits throughout the year and you cannot access your money for the year.
For many of us, having instant access to our savings is the assurance we need to regularly put money away, knowing we can easily get to it if the need arises.
Again Zopa comes through offering 1.85% variable (again keep an eye on these as it may go up or down and you may want to look to move your money), it’s a minimum opening deposit is £1 and the maximum is £85,000. You can make multiple withdrawals with no penalty.
We hope that the above shows that the best savings accounts for everyone are out there and that the current rising of interest continues to provide savers with a few more pennies for their invested pounds.
If you’ve been saving with a bank or building society and feel that the offered rates or parameters of the account have not been fully adhered to, but you have not had a suitable response when raising these issues with said provider, then please get in touch with us here at Resolver.
We are a FREE, independent issue resolution service. We connect consumers with organisations to help find the best outcome every time and we can help you resolve your issue with your bank or building society today. Get in touch today.