MARTIN Lewis has explained the best savings accounts to put away cash as interest rates remain at an all-time low.
The MoneySavingExpert urged savers to shop around for the best deals after the Bank of England confirmed it will keep rates at 0.1%.
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Banks and building societies use the base rate to decide how much they charge borrowers and pay savers.
But the top savings accounts right now actually pay far more than this, Martin explained on his ITV Martin Lewis Money Show last night.
The top easy access savings accounts from Nationwide and Aldemore currently pay 0.5% – although there are key differences between the two banks that you should be aware of.
Nationwide has a lower minimum pay-in amount of £1, compared to the £1,000 that you’ll need to deposit to open an Aldermore account.
Which savings accounts did Martin Lewis recommend for the best rates?
MARTIN Lewis explained the following savings accounts currently have the best rates:
Easy-access savings accounts:
Nationwide 0.5% – Minimum £1 deposit, but maximum of three penalty three withdrawals a year. After this, the rate goes down to 0.1%.
Aldemore 0.5% – Minimum £1,000 deposit, unlimited withdrawals.
Easy-access cash ISA:
Cynergy 0.55% – Minimum £1 deposit, maximum £20,000 per year. Unlimited withdrawals.
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But for those who may need access to their cash more often, Martin explained that Nationwide might not be the best option as you’re only allowed three penalty-free withdrawals a year.
If you make more than three withdrawals, the rate goes down to 0.1%.
Martin said savers should also consider putting their money into a cash ISA, as the best one right now from Cynergy actually beats regular savings accounts in terms of rates at 0.55%.
Cynergy lets you put away up to £20,000 a year tax-free and there are unlimited withdrawals.
The rates for the above accounts are all variable, which means they can go up or down, so savers will need to keep an eye on them.
Martin said: “All these rates are variable so if you get them, you’re going to have to monitor them to check they don’t drop.
“If you don’t want them to drop, for a guaranteed rate go for the top fixed account that locks your money in but you don’t have access to it.”
The top fixed-rate account right now is SmartSave, according to MoneySavingExpert, which pays 1.3% for five years.
But this might not be ideal for people who need access to their money, as you can’t make any withdrawals in this time.
What other savings options are there?
Easy-access accounts and cash ISAs aren’t the only options – here are a few other ways to save, as covered by Martin.
Regular savers: For smaller sums of money, Martin suggested looking at regular saver accounts – but you’ll need to be able to pay in a lump sum each month.
NatWest and RBS both pay 3.04% with their digital regular saver accounts.
Both require a minimum deposit of at least £1 per month, or a maximum of £50 per month, with interest paid yearly.
The rates are also variable, so again, you’ll need to keep an eye on your account in case they drop.
Current accounts: The top bank accounts for interest rates currently pay around 2%.
Virgin Money pays 2.02% variable on the first £1,000 in your account, with no minimum pay in.
Right now, Virgin Money also has a switch offer where you can get a free 15-case bottle of wine – check the terms and conditions first though to make sure you’re eligible.
The next best rate current account is Nationwide FlexDirect which pays an interest rate of 2% fixed for a year on up to £1,500.
Lifetime ISA: The Lifetime ISA helps people save for a first home or retirement with a bonus of up to £32,000 from the government.
You can save up to £4,000 a year and the government will then add a 25% bonus on top, effectively giving you free money.
For example, if you save £1,000 a year, the government will add in £250, and if you save the full £4,000 you’ll get an extra £1,000 on top.
If you choose to take out the money for something that is not a pension or buying a first home, you will be charged a 25% penalty.
Help to Save: Help to Save is a type of account designed to help people on lower incomes boost their savings.
The accounts are available to working people on tax credits and Universal Credit but millions are still missing out.
For every £1 you save in the account, the Government will top it up by 50p.
If you put in the maximum of £2,400, your cash will be boosted by £1,200 bringing your total savings up to £3,600.
Premium Bonds: Premium Bonds are a way to save but are different from a savings account because they don’t offer interest.
Instead, you’re in with a regular chance to win a prize with as much as £1million up for grabs.
Premium Bonds can be bought from the government-backed National Saving and Investments (NS&I) which also offers a variety of savings products too.
You can put money in and take it out whenever you want.
You need to put in a minimum of £25 to get started and you can invest up to £50,000.
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Martin has also this week warned 1.8million workers not to risk 2.6% interest charges for missing the HMRC tax deadline.
In another money reminder, the MoneySavingExpert founder urged everyone working from home to claim £125 back.
And Martin has explained why Barclaycard minimum payment changes are good – and bad – for customers.
