The best savings accounts for big savers

Get the lowdown on whether you can still get a good savings rate if you've got a large lump sum to invest.

Last week I wrote an article about the top fixed rate bonds for savers. However, what you may have noticed is that I only focused on savings accounts suitable for people with fairly small deposits starting from just £1.

So what happens if you have a much larger sum of money to deposit? In days gone by, this probably would have meant you'd get a much better rate of interest on your savings. But as times have got tougher, are larger depositors starting to lose out?

Medium savers

In last week's article, two of the top fixed rate bonds included ICICI's HiSave Fixed Rate Account and the Bank of Cyprus UK Bond 50. The ICICI account offers a rate of 4.10% AER for two years, or 3.9% for one year. And to qualify you'll need a deposit of £1,000 or more. Alternatively, the Bank of Cyprus offers a three year bond at 3.9% AER to depositors of just £1 or more.

But let's say you've got a larger deposit than this -- say £5,000. As well as being able to invest in the above accounts, are there any other options? And can you get an even better rate of interest?

In the chart below, I've highlighted three of the top fixed rate bonds for savers with a deposit of £5,000 or more:

*Note that when you invest £5,000 into this account, you'll be paid interest monthly, rather than annually.

At first glance, it seems that having a larger sum to invest doesn't mean you're getting a better rate than someone investing a smaller one. In fact, in terms of interest rate, you'd be better off plumping for either the ICICI account or the Bank of Cyprus bond.

That said, several higher paying fixed rate bonds for smaller deposits require you to tie up your funds for more than a year (ICICI's one year bond excluded). And right now, I'm not sure that's the best solution. After all, it's likely interest rates will start to climb again over the next couple of years.  

So if you're looking to lock away your funds for just one year, the above chart might highlight some attractive alternatives.

Larger savers

But what happens if you're lucky enough to have an even larger deposit such as £30,000? Obviously you could invest your funds in any of the accounts mentioned above, but are there any better accounts for the serious savers?

Well, there are a couple of options you could consider.

Abbey has recently launched a Two Year Fixed Rate Saving Bond offering an impressive 4.01% AER. To qualify you must have a deposit of at least £30,000 and your funds must be transferred from a bank outside the Santander Group (Abbey, Alliance & Leicester and Bradford & Bingley).

Alliance & Leicester has also launched an identical two year bond, although you can only access this account through a branch, and not online.

Again, however, neither of these accounts beats the ICICI HiSave Two Year Fixed Rate Account which offers 4.10%. But if safety is a big concern for you, you may feel more comfortable saving with Abbey or Alliance & Leicester.

Alternatively, if the thought of locking your money away for two years doesn't appeal, you could consider Investec Private Bank's High 5 account. You'll need a slightly smaller deposit -- £25,000 or more.

What I really like about the High 5 account is the fact that it's unique. Instead of offering a fixed rate of interest, it pays the average of the five highest savings rates on the market as published by Moneyfacts. The rate at the time of writing was 3.41% AER.

Although this means the account will never top the market, unlike most variable rate accounts, you won't have to worry that the rate will be uncompetitive in a few months' time. The interest on the account is updated on a weekly basis so you know you'll always be getting one of the best rates available.

What's more, unlike a fixed rate bond, you won't have to tie your funds up for a year or more. Instead you will need to give three months' notice if you want to withdraw money. You can also add funds to the account at any time.

Switch to a better account today

In a nutshell, it's pretty clear that whether you're a saver with a small deposit or a saver with a large one, you're getting a pretty raw deal right now. And unfortunately, for those of you with a large lump sum to invest, it won't necessarily mean you'll get a better rate than someone investing a far smaller amount.

That said, given most savings accounts are now offering a rate of less than 1% AER, any savings account that offers a rate of 3% or more looks pretty attractive right now. So don't delay, if you haven't yet switched to a better savings rate, do it today!

This article was written before the Bank of England announced that its base rate would be cut to 0.5%. We expect the rates on at least some of the accounts mentioned in this article to be cut over the next few weeks.

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