If you’re looking for a home for your hard-earned cash, you may be very happy to hear that you can earn a huge 8% on your money. You may be even more pleased to know you can get this rate without even needing to invest it.
So what do you need to do?
Where to go to get 8%
At the time of writing (mid-September 2024) you can get 8% interest by putting your money into a regular saver. Principality building society is paying this rate on its six-month regular savings account, provided you slot away between £1 and £200 a month.
Elsewhere, Yorkshire Building Society has launched two new regular savers, both paying 8% on a one-year term. There is no minimum deposit, and the maximum you can tuck away is up to £50 per month. With Yorkshire, there’s a ‘£50 Regular Saver’ which can be opened in branch or by post and managed online. There’s also a ‘£50 Regular eSaver’ which you can operate either online or via an app.
Other providers jostling for a position in the regular saver ‘best buy’ tables, include First Direct and The Co-operative Bank, both of which are paying 7% on 12-month accounts.
What’s the catch?
Regular savers come with lots of Ts and Cs, so you must be willing to adhere to these in order to get the high rate of interest. First off, you need to be disciplined about stashing away a certain minimum amount every month. Equally, as there is a ‘maximum’ amount you can slot away each month, you need to be aware that there are limits on the overall total you can save.
You also have to think carefully before making any withdrawals, as these accounts often come with restrictions. You could face penalties for breaching the limit – or potentially even account closure. With the Principality account, for example, you are not permitted to take out money in the six-month term. With the Yorkshire regular saver, access is only allowed for three days per year.
In addition, it’s worth noting that to take advantage of some regular saver accounts, you’ll need to be an existing current account customer. That said, this isn’t always the case.
Build good habits
While there may be lots of rules that come with regular savers, one of the big upsides of this type of account is the fact you’ll get into the healthy habit of saving a set amount on a regular basis.
One of these accounts is also a good way to build a nest egg if you’re saving for something in particular.
What else is on offer?
If you don’t want to have to stick to the strict rules of a regular saver, there are other decent-paying accounts to choose from.
Easy access
You could, for example, earn a respectable 4.85% with Cahoot’s easy-access savings account, on a minimum of just £1. With an easy-access account, you can dip in and out of your savings, meaning you get a lot more flexibility.
Fixed-rate bonds
Better rates (than easy access) may be available on fixed-rate bonds, but with these accounts, you need to be happy about the idea of locking away some of your hard-earned cash for a period. Typically, you can tie up your money for one, two, three – or even five – years to get a guaranteed interest rate. You can currently get a healthy 5.03% with the six-month fixed term deposit account from Raisin UK. The minimum deposit is £1,000.
Cash ISAs
It’s important to give some thought to individual savings accounts (ISAs) where you can squirrel away up to £20,000 a year tax-free. We’ve got many ISA guides to help you get started. Charter Savings Bank, for example, is currently paying 4.67% on its one-year fixed-rate cash ISA.
What’s happening to savings rates?
Since the Bank of England lowered the base rate in August (from 5.25% to 5%), banks and building societies have been quick to respond, reducing rates across both fixed term and easy-access accounts.
Rates aren’t falling fast, but they are falling. Right now, there are only a handful still clinging on above 5%.
And, with markets pricing in one or two more cuts this year, they are likely to drop further still.
With this in mind, you need to ensure your money is working as hard as possible. Be sure to shop around – and remember you’ll usually earn more from an online savings account than from a high street bank. Don’t forget to check out less familiar ‘challenger’ brands, too.
Think about a fix
With rates falling, if you can afford to lock money away in a fixed-rate bond, that’s likely to be a sensible approach right now.
How do I find the best rates?
If you want to find the top rates for your cash, your best starting point is a comparison site such as Moneyfactscompare or Go.compare.
Consider a cash savings platform
Equally, if moving your money around every few months feels a bit like too much effort, you might want to look at a cash savings platform. With one of these, you open a single account and can then switch between accounts with a range of different banks. You can also see everything in one place – and can manage your money from an app, meaning minimal effort is required.
All rates correct at time of writing.
Image by Diego Maravilla on Canva
