Six top savings accounts out now

We separate the wheat from the chaff to highlight six of the best savings accounts on the market.

The rates on many savings accounts continue to disappoint, so to get a decent return on your cash, you’ll need to research your options carefully.

Of course, everyone’s savings needs are different, and interest rates aren’t the only factor to consider. Here, I’m going to round up my top choices in three different savings categories - so there should be something to appeal to every pocket.

In each case, I’m going to be focusing on ‘no strings’ accounts that don’t require you to have another linked product with the same provider.

Easy access

If you think you might need to get your hands on your savings quickly, an instant access account is probably for you. That flexibility comes at a cost (easy access rates are typically lower than those offered by other types of savings accounts) but there are still some decent deals around.

My top choice would be the AA’s Internet Extra (Issue 3) account: It offers a market-leading variable rate of 2.8% AER, including a 2.3% fixed bonus element.

The account can be operated online, you can invest between £1 and £1 million, and you can make unlimited deposits and withdrawals with no delays or financial penalties.

However, if you’d like a bit more security when it comes to the interest rate, you might prefer my second pick. The ING Direct (UK) Saving Account offers a slightly lower rate of 2.75% AER; but - unusually - this rate is fixed for 12 months.

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Again, you can save between £1 and £1 million, and make an unlimited number of deposits and withdrawals.

Just bear in mind that this rate is only available to new ING Savings customers. And in the case of both these accounts, the rate is likely to be uncompetitive after a year, so that’s when you’ll need to move your money again.

Regular savings

If you can commit to putting away a certain amount every month, a regular savings account can really help you into the savings habit.

The rates are typically much better than those offered by instant access accounts - and they’re usually fixed for a year, so you don’t need to worry about them plummeting while your back is turned.

Regular savings accounts are usually quite inflexible when it comes to withdrawals. However, there’s now one that offers instant, penalty-free access.

It’s my first choice - the 12 Month Fixed Rate Regular Saver, from Saffron Building Society. This account pays 4% AER, and allows you to save between £10 and £200 per month.

You can make withdrawals and miss payments whenever you like, with no financial penalties. The main downside is that it can only be operated through branches or by post - so it’s no good if you’re a fan of internet banking.

My silver medal in this category goes to the Fixed Rate Monthly Saver (Issue 12) account from Santander.

It also offers a good rate of 4% AER - and for 13 months, a month longer than Saffron’s account. You’re also allowed to save slightly more; between £20 and £250 every month.

However, this account is not flexible. If you deposit less than £20, you’ll receive a rate of just 0.1% for that month. And if you try to overpay, you get that 0.1% rate for the rest of the account’s term.

The other hitch is that the account can only be operated via branches or by phone, not by post or via the internet.

One year bonds

When it comes to bonds, I’d currently be inclined to go for a short-term option only. If the base rate recovers in the next couple of years - and savings rates rise - any long-term bond rates chosen now are likely to be left far behind.

Obviously I could be wrong - only time will tell! But here, I’m going to focus on one year bond rates only.

Both my top picks in this category come from Indian-owned banks. The Fixed Deposit Account from the Punjab National Bank pays 3.1% AER, and you can save anything from £1 to £100,000.

The account can be accessed by post or in branches, and is fully covered by the £50,000 FSCS compensation scheme.

My second choice - the One Year HiSAVE Fixed Rate Account from ICICI - also pays 3.1% AER. Again, it is fully covered by the FSCS compensation scheme.

However, you’ll need to deposit a minimum of £1,000 (there’s no upper limit).

Happy saving!

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