Savers can finally earn a decent rate on any spare cash they have after years of low returns.
Banks and savings providers are putting up these rates because the Bank of England is steadily hiking interest rates.
The base rate - now 2.25% compared to 0.1% a year ago - is factored in to the interest paid to savers.
Rising base rate means savers can now get savings deals paying up to 5.12%.
However, this is still far below the level of inflation - currently at 40-year highs of 10.1%.
That means even cash held in the very best savings deal is losing value in real time.
If inflation was 0%, £100 in an account paying 5% interest would be worth £105 after a year.
With inflation at 10.1%, the same amount of cash earning the same interest would still be worth £105 after 12 months, but would only buy you £94.90 of stuff in the real world.
But that doesn't mean savers should lose heart.
Any spare cash you have during the cost of living crisis still needs to be kept somewhere.
It makes sense to keep it in a savings deal that's right for you, earning at least some interest.
One in three (29%) of us say we are dipping into our savings more than six months ago, according to investing firm Fidelity this week.
But one in six (15%) are saving more - because they're worried they'll need an emergency fund of cash.
When picking a savings account, make sure the bank or building society is covered by the Financial Service Compensation Scheme (FSCS) which protects up to £85,000 of your money if a provider goes bust.
The personal savings allowance - how much you can earn tax-free each year - is £1,000 for basic-rate taxpayers.
Best easy-access savings accounts
Easy-access savings accounts allow you to withdraw your money when you want - although some providers do limit how many withdrawals you can make a year.
Others require that you deposit a certain amount to open the account.
Easy-access deals are good for those who may need to dip into their savings - although the rates aren’t as good as fixed accounts.
According to money experts Savings Champion, the top-paying standard easy-access accounts at the time of writing (November 1) are:
- Marcus - 2.5% (minimum deposit £1 - includes boosted 0.25% rate for 12 months)
- Saga - 2.5% (minimum deposit £1 - includes boosted 0.25% rate for 12 months)
- Yorkshire Building Society - 2.5% (up to £5,000 - 2% above this amount)
- Investec- 2.45% (minimum deposit £5,000)
However, there are ways to get a better rate - depending on how much money you have to put away.
Barclays' Rainy Day Saver offers a rate of 5.12% but you need to an existing customer and you can only deposit up to £5,000.
The Nationwide FlexDirect current account pays 5% interest fixed for one year for new customers - but only on up to £1,500.
You also need to pay in at least £1,000 a month to get this rate and it falls to 0.25% after one year.
Or the HSBC Online Bonus for HSBC current and savings account holders offers 3% - but this drops down to 0.5% on the months you withdraw your cash.
Best notice savings accounts
Like the name suggests, these accounts require you to give notice when you want to withdraw your money.
The top-paying notice accounts right now are:
- United Trust Bank: 3.2% (200 days notice - minimum deposit £5,000)
- OakNorth Bank: 3.1% (120 days notice - minimum deposit £1)
OakNorth Bank: 3.07% (90 days notice - minimum deposit £1)
Best fixed-rate savings accounts
Fixed-rate accounts don't normally allow you to withdraw your money until the end of the term - not ideal for households who may need to access their funds in a hurry.
You do get a better return compared to easy-access accounts, however.
These deals come with different "terms" - or lengths.
At the end of that time, your cash is paid back to you, with the interest. Some deals pay the interest monthly instead.
The top-paying fixed accounts right now are:
- RCI Bank: 4.6% (one year fixed - minimum deposit £1,000)
- RCI Bank: 4.85% (two year fixed - minimum deposit £1,000)
- Tandem: 4.9% (three year fixed - minimum deposit £1)
- Close Brothers: 5.05% (five year fixed - minimum deposit £10,000)
It is possible to beat some of these rates if you go with a Sharia bank account.
Sharia deals come from Islamic banks, which cannot pay interest for religious reasons.
Instead, they pay an 'expected profit rate'.
That means they may not pay the headline amount.
However, in the history of UK Sharia banks no deal has ever paid less than the advertised amount.
In fact, they can pay even more than the expected profit rate - but this has never happened in the UK either.
- BLME: 5% (two year fixed - minimum deposit £1,000)
BLME: 5% (three year fixed - minimum deposit £1,000)
BLME: 5% (five year fixed - minimum deposit £1,000)
Best ISA savings rates
ISA stands for Individual Savings Account.
Each year, you can deposit £20,000 into an ISA and you don't pay tax on the interest.
The rates on these savings products have been improving in recent years, although you can still get better rates elsewhere.
The top-paying easy-access cash ISAs right now are:
- Marcus - 2.5% (minimum deposit £1)
Saga - 2.5% (minimum deposit £1)
Skipton Building Society - 2.1% (minimum deposit £1)
Make sure you read the small print, as even 'easy access' ISAs might only allow a limited number of withdrawals a year.
The top-paying fixed-rate ISAs right now are:
- Coventry Building Society - 3.95% (one year fixed - minimum deposit £1)
- Coventry Building Society- 4.35% (two-year fixed, minimum deposit £1)
Coventry Building Society- 4.4% (three-year fixed, minimum deposit £1)
- Paragon - 4.27% (five-year fixed, minimum deposit £500)
Again, that is not a typo - you can earn more taking out a two-year deal than you will a five-year one.
Savings in tax-free accounts like ISAs do not count towards your personal allowance.
