My top seven savings accounts

If you're looking for a new home for your savings, check out these top seven accounts...

If, over the past year or so, you’ve given up hope of ever finding a decent savings account, I really wouldn’t blame you. However, if you look hard enough, believe it or not, it is still possible to get a decent return on your savings. And in this article, I’m going to show you exactly where to look!

So here are my top seven savings accounts.

NS&I index-linked savings certificates

These days, trying to find a savings account that guarantees to beat inflation can be challenging. Luckily, however, the index-linked savings certificates from National Savings and Investments (NS&I) do just this.

These accounts are designed to beat inflation because they provide a return which is linked to the RPI (retail prices index) plus a fixed rate of 1%. The RPI is currently 5.3%, so this means that over the past year, if you’d invested in one of these accounts, you’d have earned 6.3%. And the best bit is, it’s tax-free!

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You can choose to invest in a three year or five year index-linked savings certificate (or both) and the minimum you can invest is £100, while the maximum is £15,000. Every time a new issue goes on sale, you can invest up to another £15,000 tax-free, should you choose to – and unlike ISAs, these accounts aren’t tied to the tax year.

You can access your funds whenever you want, but if you choose to do so within the first year, you won’t earn any index-linked or extra interest. If you withdraw money after the first year, but before the investment term is up, you will earn index-linking and extra interest for each complete month you’ve held your certificate. So you can still earn a decent return.

Saffron Building Society Wedding Saver

If you’re getting married any time soon, or even if you’re not, and you want to build up your savings, the Saffron Building Society Wedding Saver may have the answer.

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This account is a little different to most savings accounts because it offers an interest rate which is guaranteed to be in the best 10 available in the online savings market, as measured by Moneyfacts. (The rate is calculated on a quarterly basis.)

Currently the rate is 2.25% and although this isn't the market-leading easy access savings account (see below), the advantage of this account is that you can be reassured you're always getting a competitive rate of interest.

You only need £10 to open the account, and you can invest up to £2,000,000 for joint accounts, and £1,000,000 for sole accounts. You can make regular monthly payments into the account, or one-off payments. And because it’s easy access, you can get your hands on your cash whenever you want.

However, to apply for this account, you will need to set up a savings goal plan for your wedding. This is very quick and easy to do and even if you’re not getting married, you can still enter a couple of goals and you’ll then be taken to the application form.

Santander and Alliance & Leicester

Another way to get a decent interest rate on your savings is to opt for a high interest current account instead. The Santander Preferred In-Credit Rate Account and the Alliance & Leicester Premier Direct Current Account both offer an interest rate of 5% for a year on the first £2,500 of your balance. That’s better than most savings accounts pay! But note that balances over £2,500 earn just 0.10%, so it's a good idea to move extra savings somewhere else.

If you need to access your funds at any time, you can do so as there are no penalties for withdrawing your cash.

Just bear in mind that to qualify for this rate of interest, you’ll need to pay £1,000 a month into the Santander account and £500 a month into the Alliance & Leicester account. You should also be aware that once the first year is up, the interest rate will drop to 1%.

Halifax Web Saver Extra

Sticking with current accounts, another great account is the Halifax Reward Current Account. This pays £5 every month you pay £1,000 into the account – whether you’re in credit or overdrawn. So you can simply pay in your £1,000, get the £5, and then move your money elsewhere.

But the real bonus of having the Halifax current account is that you'll be able to apply for a competitive savings account - the Halifax Web Saver Extra - and enjoy a 0.20% bonus on the interest rate. This means you'll receive a pretty decent 2.80% on your savings.

Admittedly this isn't quite as high as the market-leading Coventry Building Society 1st Postal account which offers an interest rate of 3%. But the advantage of the Halifax Web Saver Extra is that you can operate it online (the Coventry BS account can only be operated by post) and you have the benefit of earning £5 a month on your current account.

What's more, the minimum opening balance for the Halifax Web Saver Extra is £1, whereas you will need at least £1,000 to open the Coventry BS account. Just be aware that although you can get your hands on your cash whenever you want, if you make more than one withdrawal in a year, you will lose the equivalent of 30 days’ interest on the amount you withdraw.

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Cash ISAs

Finally, no savings article would be complete without mentioning a cash ISA. After all, cash ISAs are a brilliant way to save tax-free.

But the problem with some ISAs is that they don’t allow transfers in. So if you’ve already got a cash ISA which is paying a pathetic rate of interest, you might be wondering where to move your funds to.

Good options to consider are the Santander Direct ISA and the Alliance & Leicester Direct ISA. Both of these accounts offer an interest rate of 2.75% which includes a 12 month bonus of 2.25%. These both allow transfers in from other cash ISAs and you’ll be able to access your savings whenever you want.

Just bear in mind that to qualify for the 2.75% interest rate, you will need to open the account with £9,000 or more. If you pay in less than this, the rate will be 2% (including a 1.5% bonus).

So if you’re after a better savings account, you have no excuse not to find one!

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