February 2018: What are the best savings account rates?

We round-up the best savings accounts for the year.

Rates are expected to tick upwards this year, experts say. The ending of the Term Funding scheme next week and the prospect of a rise in base rate later this year augurs well for savers. 

The Term Funding scheme lets banks and building societies borrow from the Bank of England at rock-bottom rates.  When it closes, providers are expected to turn once more to savers. 

On taxable easy-access accounts ICICI Bank Hi-Save Bonus Saver currently pays a top 1.35 per cent.  But the rate includes a 0.7 percentage point bonus payable until the end of January next year. Top accounts with no bonus include French-owned RCI Bank Freedom account at 1.3 per cent, Ford Money Flexible Saver at 1.22 per cent and Paragon Bank Limited Edition Easy Access account at 1.21 per cent. 

On taxable fixed rate bonds, the best one-year rate comes from Atom Bank at 1.95 per cent, followed by Investec Bank at 1.9 per cent.  The top two-year rates come from Atom at 2.1 per cent followed by Secure Trust Bank and Paragon Bank, both at 2.06 per cent

On tax-free accounts, the best easy-access rate is 1.21 per cent from Virgin Money Easy Access Cash Isa.  Leeds BS has launched a new issue of its Limited Issue Online Access Isa also at 1.21 per cent.  But the account only runs until 30 April next year, after which you are likely to earn a lower rate. 

You can earn a higher 1.45 per cent fixed for one year with Paragon Bank, Aldermore Bank or Post Office Money, 1.42 per cent from Oaknorth Bank and 1.41 per cent with Virgin Money.  For two years the best rate is 1.66 per cent from Virgin Money. 

How to beat inflation

To beat inflation, currently running at 3 per cent, compromises need to be made as all of the small number of regular savings accounts that pay more than inflation require savers to have a current account with the provider. Our sister publication Moneywise regularly keeps tabs on the savings market and has found there are six accounts that currently beat inflation.

-UK inflation: where’s it heading in the long term?

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