The eleven savings accounts with the best interest rates for 2023

Rising interest rates are good news for savers, who until recently earned next to nothing on the money sitting in their bank accounts. 

The Bank of England raised the interest rate to 5.25pc on 3 August, and with inflation still higher it is vital you find the very best deal to protect your cash. 

Savers with £50,000 can bump up their returns by as much as £1,953 per year by switching to a top-rate account. 

The average easy access account pays around 2.96pc, while the top easy access rate on the market is 5.2pc from Santander, according to the analyst Moneyfacts. Santander’s Limited Edition account only pays this rate for 12 months.

Sainsbury’s Bank is paying among the lowest returns, with its Extra Saver accounts offering 1pc. A saver with £50,000 in this account will earn around £500 a year in interest. Moving the deposit to the best buy account would yield £2,663 a year, an extra £2,163.

“The consecutive Bank of England base rate rises have had a positive impact on variable savings rates,” says Rachel Springall of Moneyfacts. 

“But these rises may not have been passed on to everyone. As we have seen over the years, loyalty does not always pay, and as some institutions increase their easy access rates through base rate rises and competition, some of the biggest banks are paying less than the market average of around 2.96pc. 

“It will be down to savers to compare their accounts regularly and move elsewhere if they are getting a poor return on their hard-earned cash.”

To get a better deal, savers can opt to put their money into longer-term fixed-rate savings bonds, which are now paying out interest of more than 6pc a year, guaranteeing returns only provided by the stock market in recent memory. 

The top one-year bond from NS&I pays 6.2pc. A saver who puts £50,000 in the top account would earn £3,190 interest a year.

Use our calculator below to find out how much interest you’d earn from a lump sum or regular monthly payments.

To help you get the most out of your savings, the Telegraph has compiled the best rates available on the market right now for Isas, bonds, savings and current accounts.

What is the difference between an Isa, bond, savings and a current account?

A current account is a transactional account that typically pays no interest but gives you a lot of flexibility in how often you access your money. 

With a savings account, the bank pays you interest for keeping your money and therefore imposes some restrictions on how many withdrawals you can make. 

A fixed-rate bond is a savings account with a fixed term, usually between one and five years. Until the duration of the bond is up, you cannot withdraw your funds, but in exchange for the commitment you will typically benefit from a higher rate. 

The difference between an Isa and other savings accounts is that there is no tax charged on the interest. Everyone can save up to £20,000 a year tax-free in an Isa. 

How to choose the right account for you

The first thing to consider is whether you might need access to the funds in an emergency. A current account or an easy-access savings account will give you this flexibility. 

However, you will get a higher rate if you are willing to lock away your funds for a set period (for example, in a bond). Generally, the longer the period, the higher the rate – however this is not the case at the moment. Fixed-rate accounts with one and two year terms are far higher than those with five-year rates.

The other thing to consider is whether you are at risk of exceeding your personal savings allowance. This is £1,000 for a basic-rate taxpayer and £500 for a higher-rate taxpayer. If you earn more than this in interest outside of an Isa, then you will have to pay income tax.

Use our calculator to work out whether you could breach your allowance and if you should get an Isa. 

The best Isa rates for 2023

Easy access 

Moneybox Cash Isa – 4.65pc 

Savers can open the account with £500. The 4.65pc interest rate lasts for the first 12 months, after which time it reduces to 3.8pc. Savers can make up to three withdrawals in each 12-month period; any more, and the rate will reduce to 0.75pc. The rate will also drop to 0.75pc if the account balance drops below £500.

One-year fixed rate 

Virgin Money 1-Year Fixed-Rate Cash Isa – 5.80pc 

The minimum deposit is £1. Interest is paid on maturity and must be compounded.

Early withdrawals are subject to a charge equivalent to 60 days’ loss of interest on the amount withdrawn. 

Two-year fixed rate

Charter Savings Bank 2-Year Fixed-Rate Cash Isa – 5.8pc

The minimum deposit is £5,000. Interest can be paid annually and can be paid away or compounded.

Early withdrawals are subject to a charge equivalent to 180 days’ loss of interest on the amount withdrawn. 

Five-year fixed rate

Zopa Smart Isa 5-Year Fixed-Rate Cash Isa – 5.26pc

You need a minimum of £1 to open an account, and can save up to £100,000. Interest is paid monthly and must be compounded. If you make withdrawals before the five-year fixed term is over, then a penalty charge equivalent to 365 days’ loss of interest will be applied.

The best bond rates for 2023

One-year fixed rate

NS&I Guaranteed Growth Bonds 1-Year Bond – 6.20pc 

You can save between £500 and £1m. Interest is paid on the account’s anniversary, and must be compounded.

Two-year fixed rate

Close Brothers Savings 2-Year Bond – 6.05pc 

You can save between £10,000 and £2m. Interest is paid annually, and must be paid away.

Five-year fixed rate

Tandem Bank 5-Year Bond – 5.8pc

You can save between £1 and £2.5m. Interest is paid annually and must be paid away.

The best savings account rates for 2023

Easy-access savings account

Santander Easy Access Saver Limited Edition – 5.2pc 

You can save between £1 to £250,000. The account has a 12 month term, and interest is paid when the term ends and must be paid away.

Regular savings account 

First Direct Regular Saver Account – 7.00pc 

You have to make a minimum deposit of £25 a month for one year. However, the maximum amount you can save each month is just £300. Interest is paid on maturity.

Notice savings account

Oxbury Bank 180 Day Notice Account – 5.59pc 

You can save between £1,000 and £500,000. You must give 180 days’ notice before making a withdrawal or closing the account. Interest is paid monthly and can be paid away or compounded.

The best current account rates for 2023

Nationwide FlexDirect Current Account – 5pc (up to £1,500) 

You must pay at least £1,000 a month to earn interest.

This article is kept updated with the latest rates.