How to unlock ‘impressive’ savings rates of up to 8% – and get up to £185 on top
SAVERS can unlock interest rates of up to 8% a money expert has revealed.
The top rates on traditional savings accounts like fixed and easy access are currently just over 5%.
But Lucinda O'Brien of comparison site Money.co.uk says savers can get better if they "look closer to home".
It is important to make sure you are getting the best rates on your savings.
For example, if you put £100 into a savings account with a 1% interest rate, you’d have £101 a year later.
But if you saved the same amount with a rate of 8%, then you'd have £108.
Read more on Money
Inflation, which is currently 4%, can eat away at your savings too, as your money won't stretch as far when prices rise.
A simple switch could unlock rates that are twice that.
She said: "It’s not a big secret that rates on savings accounts are slowly decreasing.
"Last year, savings accounts were on a high with rates above 6% on some fixed-rate accounts.
Most read in Money
"But this couldn’t last forever, as the economic climate changed."
The top interest rate for an easy-access account stands at 5.22% with Metro Bank's instant access savings account.
Investec comes out top for fixed rate as it has a one-year fixed-rate saver with a rate of 5.30%.
Lucinda said: "These rates are definitely still competitive and will help savers to earn some extra money on their cash.
"However, if you are keen to find the top rates, then you might need to look closer to home."
Nationwide is offering 8% on its regular saver accounts, First Direct 7% and TSB 6%.
But there's a catch.
"These accounts are for existing customers only or for people that decide to switch their current account," she said.
"Alongside attractive switching offers, banks are also trying to get more customers by offering these higher rate linked savings accounts", Lucinda adds.
What this means is that if you want to access these rates, you'll need to have a current account with the bank.
Savers should also be aware that with regular savers, a type of account often linked to current accounts, there are limits on how much you can save.
For instance, with Nationwide the maximum you can save is £200 a month.
There may be other restrictions too, so check the terms and conditions first to make sure that the account suits you.
With Nationwide you are also limited to only three withdrawals a year, or the interest rate drops to 2.15%.
The rate with TSB is 6% on its monthly saver account, which you can get if you have a Spend and Save current account.
You can save between £25 and £250 but there's no withdrawal fee.
TSB also has a switching offer of up to £185 if you switch to this current account.
First Direct is offering 7% on its regular savings account for those who have a 1st account.
You can save between £25 and £300 a month. If you save the maximum amount and don't withdraw the cash you can earn up to £136.50 in interest after 12 months.
The bank is also offering a switching bonus of £175.
As with choosing a savings account, check the current account suits your needs.
Lucinda said: "These accounts mentioned above show there are still some good offers within the savings account market, but you’ll need to do your research to get the best deal."
How you can find the best savings rates
If you are trying to find the best savings rate there are websites you can use that can show you the best rates available.
Doing some research on websites such as MoneyFacts and price comparison sites including Compare the Market and Go Compare will quickly show you what's out there.
These websites let you tailor your searches to an account type that suits you.
According to data supplied by Moneyfacts, the average easy-access savings rate is currently at 3.18% whereas in January 2023 it was at 1.56%.
Whereas the average one-year fixed bond rate was 3.56% in January and is now 5.14%.
There are three types of savings accounts fixed, easy access, and regular saver.
A fixed-rate savings account offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw but it comes with a hefty fee.
An easy-access account does what it says on the tin and usually allow unlimited cash withdrawals.
These accounts do tend to come with lower returns but are a good option if you want the freedom to move your money without being charged a penalty fee.
Lastly is a regular saver account, these accounts generate decent returns but only on the basis that you pay a set amount in each month.
How do I switch my bank account?
Switching bank accounts is a simple process and can usually be done through the Current Account Switching Service (CASS).
Many high street banks and building societies are signed up and there is a full list on the CASS' website.
All the hard work is done for you, so you do not have to worry about remembering to switch all of your direct debits.
You simply need to apply for the new account you want to open and the new bank will tell your existing one that you are moving.
Before switching there are a few things that you should do, such as choosing a switch date and transferring old bank statements to the new account.
When you are switching be sure to read all of the terms and conditions of the new account to make sure it meets your needs.
Also factor in what other perks might come with opening up the account, such as the savings rates we previously mentioned.
Martyn James, consumer expert, said: "Switching accounts can be a great way to make some money or earn some extra cash, but the devil is in the detail.
READ MORE SUN STORIES
"Pretty much all switching deals can be withdrawn at any point.
"But more importantly, they all come with catches. You may need to have your wages paid into the account or a certain amount of money going through it each month."