Key facts
- UK savings providers are fiercely competing, pushing interest rates higher.
- Instant-access accounts can now yield up to 5% interest.
- Regular savings accounts are offering rates as high as 8%.
- Over half of savings accounts now pay more than the Bank of England base rate of 3.75%.
- Revolut and Santander are among providers offering 8% or higher rates on specific savings products.
Competition among UK savings providers is intensifying, leading to higher interest rates across various account types. Savers can now find instant-access accounts offering up to 5% interest and regular savings accounts with rates as high as 8%. This surge in competitive offers means that over half of all savings accounts now pay more than the Bank of England's base rate of 3.75%.
Rachel Springall, an analyst at Moneyfacts, noted that the choice of savings products is good but emphasizes the need for savers to be proactive and switch accounts to maximize returns. The number of savings accounts paying above the base rate has reached 1,385, the highest in over six years.
For instant-access accounts, Revolut is offering new UK customers a market-leading 5% rate until December 4 on balances up to £25,000. After this promotional period, rates will revert to standard plan levels, which can be as low as 2.9%. Chase, the UK retail arm of JP Morgan, offers a 4.5% rate on its easy-access Chase Saver account, boosted by a 2.25% interest bonus for the first 12 months, with a high balance limit of £3 million, though a Chase current account is required.
Fixed-rate savings bonds are also providing attractive returns. The average one-year fixed bond rate has climbed to 4.22%, its highest since November 2024. Marcus by Goldman Sachs offers a one-year fixed-rate bond at 4.9% for balances up to £250,000, while Atom Bank offers 4.8% for a similar term.
Regular savings accounts, which typically require monthly deposits, are also seeing high rates. Lloyds has launched a Monthly Saver account paying 8%, and Santander offers a similar 8% rate on its regular savings account for 12 months, with limits on monthly deposits and a requirement to hold a current account with the bank.
However, savers need to be mindful of the personal savings allowance, which dictates how much interest can be earned tax-free. Basic-rate taxpayers have an allowance of £1,000, higher-rate taxpayers £500, and those earning less than £17,570 can earn up to £5,000 tax-free.