It’s hard to believe that almost a decade ago interest rates were an average of 0.79% on an instant access savings account. Just to put this into perspective, today’s interest rates are the lowest levels on record with most of the high street banks offering just 0.01% on their easy access savings accounts. However, the Bank of England’s base rate is 0.1% so it stands to reason that you should be able to access better rates with a bit of due diligence.
If these numbers seem insignificant to you, take a moment to consider the current rate of inflation which is presently 0.5%. If you have money sitting in your account which is earning 0.01% interest, and inflation is at 0.5%, this means that over time your savings will actually be losing value.
The answer is to step away from the high street banks and find an establishment that can offer interest rates that match, or even surpass inflation. Here we have listed a few of our recommendations but please be aware that interest rates can change at any time and you would be best served to check these rates are still relevant before opening an account.
Best Interest Rate for First Time Home Buyer
If you are saving for your first home then there are a number of establishments that will offer you a great rate on your savings, providing you take out your mortgage with them. One of these is the Monmouthshire Building Society, which currently offers 0.5% interest on their First Home Bonus Saver account, however, if you were to close this account and take our their mortgage within five years you would earn the bonus which would take your interest up to 4.5% AER.
Best Fixed Rate Bonds Interest Rate
If you are looking to lock away a deposit for a fixed period of time then you can take advantage of the 1.5% AER that is currently on offer at the Bank of London and The Middle East, Premier Deposit Account.
Best Interest Rates for Monthly Interest Accounts
Having your interest paid monthly can help build your initial deposit through compounding. If you are able to put your money aside for a period of five years, then Paragon Bank are currently offering 1.04% on their 5 Year Fixed Rate Saving Account.
Easy Access Savings Account
For an Easy Access Savings Account, the best interest rate we could find was with Saga who are currently offering 0.70% AER with interest being paid monthly.