This week’s best savings rates

For the first time in more than two years, hundreds of savings accounts offer a rate that beats CPI inflation, after it fell to 4.6pc in October, according to figures from the Office for National Statistics. 

However, it might not last long. Savings rates appear to have peaked, with several top rates already disappearing from the market in recent weeks. As such, anyone looking to secure a generous account may need to act fast.

“The top rates on fixed-rate bonds are dominated by challenger banks, which have their own reasons to change rates, but they could well be monitoring swaps very closely,” says Rachel Springall, of Moneyfacts.

“If there is a sentiment for fixed rates to fall longer-term, we may see more immediate impact on the five-year fixed markets, but also the current margins between the top rate shorter-term fixed bonds to tighten.

“Savers may wish to act now to secure a top fixed rate bond, as rates in this market can come and go very quickly.”

While a lower inflation rate will put less pressure on your finances, it’s still important not to leave your savings languishing in an account with a poor rate.

The average easy-access account pays around 3.17pc, while the top easy-access rate on the market is 5.22pc from Metro Bank, with its Instant Access Savings Account Limited Edition Rate, according to market analysts MoneyFacts.

Punjab National Bank is paying among the lowest returns, with its savings account offering 0.75pc. A saver with £50,000 in this account will earn around £376.29 a year in interest. Moving the deposit to the best buy account would yield £2,673.36 a year, an extra £2,297.07.

To get a better deal, savers can opt to put their money into longer-term fixed-rate savings bonds.

The top one-year bond from Metro Bank pays 5.91pc. A saver who puts £50,000 in the top account would earn £3,036.37 interest a year.

Use our calculator below to find out how much interest you’d earn from a lump sum or regular monthly payments.

To help you get the most out of your savings, The Telegraph has compiled the best rates available on the market right now for bonds, savings accounts, Isas and current accounts.

The best bond rates for 2023

One-year fixed rate

Metro Bank 1-Year Fixed-Term Savings Account – 5.91pc

You can save between £500 and £2m. Interest is paid on the account’s anniversary.

Two-year fixed rate

Union Bank of India 2-Year Fixed Rate Deposit – 5.8pc

You can save between £1,000 and £1m. Interest is paid on maturity.

Five-year fixed rate

JN Bank 5-Year Bond – 5.5pc

You can save between £1,000 and £100,000. Interest is paid annually and must be compounded.

The best savings account rates for 2023

Easy-access savings account

Metro Bank Instant Access Savings Account - 5.22pc

You can save between £1 to £2m, however the higher 5.22pc rate is only paid if you open a new account and deposit at least £500 in the first 28 days – otherwise you’ll earn 1.65pc. If you do qualify for the higher rate, it will last for 12 months, after which time it will drop. 

Interest is paid monthly and must be compounded.

Regular savings account 

Nationwide Flex Regular Saver – 8.00pc 

This account has a 12-month term and can be opened with just £1. You don’t need to make deposits every month, but the maximum monthly amount you can pay in is just £200. If you make four or more withdrawals, the interest rate will fall to 2.15pc for the rest of the term. Interest is paid annually. 

Notice savings account

Oxbury Bank 180 Day Notice Account – 5.59pc 

You can save between £1,000 and £500,000. You must give 180 days’ notice before making a withdrawal or closing the account. Interest is paid monthly. 

The best current account rates for 2023

Nationwide FlexDirect Current Account – 5pc (up to £1,500) 

You must pay at least £1,000 a month to earn interest.

The best Isa rates for 2023

Easy-access 

Metro Bank Easy Access Cash Isa – 5.11pc 

Savers can open the account with just £1. Rate will drop to 1.65pc after the first 12 months. Interest is paid annually and can be paid away or compounded.

One-year fixed rate

Virgin Money 1-Year Fixed-Rate Cash Isa Exclusive – 5.85pc 

For new and existing customers with a Virgin Money current account. The Isa can be opened with £1. Interest is paid on maturity and must be compounded.

Early withdrawals are subject to a charge equivalent to 60 days’ loss of interest on the amount withdrawn. 

Two-year fixed rate

Saffron Building Society 2-Year Fixed-Rate Cash Isa – 5.4pc

The minimum deposit is £500. Interest is paid annually, and can be paid away or compounded.

Five-year fixed rate

Melton Building Society 5-Year Fixed-Rate Cash Isa – 5pc

You need a minimum of £1,000 to open an account. Interest is paid annually and must be compounded. 

If you make withdrawals before the five-year fixed term is over, then a penalty charge equivalent to 180 days’ loss of interest will be applied.

What is the difference between an Isa, bond, savings and a current account?

A current account is a transactional account that typically pays no interest but gives you a lot of flexibility in how often you access your money.

With a savings account, the bank pays you interest for keeping your money and therefore imposes some restrictions on how many withdrawals you can make.

A fixed-rate bond is a savings account with a fixed term, usually between one and five years. Until the duration of the bond is up, you cannot withdraw your funds, but in exchange for the commitment you will typically benefit from a higher rate.

The difference between an Isa and other savings accounts is that there is no tax charged on the interest. Everyone can save up to £20,000 a year tax-free in an Isa.

How to choose the right account for you

The first thing to consider is whether you might need access to the funds in an emergency. A current account or an easy-access savings account will give you this flexibility. 

However, you will get a higher rate if you are willing to lock away your funds for a set period (for example, in a bond). Generally, the longer the period, the higher the rate – however, this is not the case at the moment. Fixed-rate accounts with one and two-year terms are far higher than those with five-year rates.

The other thing to consider is whether you are at risk of exceeding your personal savings allowance. This is £1,000 for a basic-rate taxpayer and £500 for a higher-rate taxpayer. If you earn more than this in interest outside of an Isa, then you will have to pay income tax.

Use our calculator to work out whether you could breach your allowance and if you should get an Isa.

This article is kept updated with the latest rates.