Savings account rates: how to make your money work harder

The Financial Services Compensation Scheme (FSCS) protects up to £120,000 per person, per authorised institution (raised from £120,000 in December 2025). If you have savings with multiple brands owned by the same banking group, they may share a single £120,000 limit — always check. FSCS protection status is shown in the table above for every account listed. Where an account holds savings via a partner bank (e.g. ClearBank), protection applies through that bank — check you don't already hold savings there. If an account is not FSCS protected, that is flagged clearly — it doesn't mean it's unsafe, but you should understand what alternative protection applies before opening one.

Most people on everyday incomes pay no tax on savings interest, thanks to the Personal Savings Allowance (PSA). Basic-rate taxpayers (income up to £50,270) can earn up to £1,000 in savings interest per year before any tax is due. Higher-rate taxpayers get a £500 allowance; additional-rate taxpayers receive none. At a rate of 5% AER, a basic-rate taxpayer would need roughly £20,000 in savings before tax becomes relevant. If your interest stays within your allowance, interest is simply paid gross — no action needed. If you exceed the PSA, HMRC will typically collect the tax through an adjustment to your PAYE tax code. Interest inside a cash ISA is always tax-free and does not count against the PSA.

Neither term is a regulated definition — both are marketing descriptions. In practice, "easy access" and "instant access" are often used interchangeably, but the access conditions can differ significantly. Some accounts marketed as easy-access require same-day notice; others process withdrawals only on working days, meaning a Friday request may not clear until Monday. Before opening any account, check: (1) how quickly withdrawals actually reach your nominated account; (2) whether withdrawals are restricted on weekends or bank holidays; and (3) whether there is a limit on the number of withdrawals per year (some accounts penalise frequent withdrawals). The table notes above flag any access restrictions for each account listed.

For most people on modest incomes whose savings interest falls within the Personal Savings Allowance, a cash ISA currently offers no immediate tax advantage. A non-ISA easy-access account paying a higher gross rate is likely the better choice in the short term. However, there are two reasons a cash ISA may still be worth considering: (1) future-proofing — if your savings grow, your interest rate rises, or the PSA is reduced by future legislation, the ISA wrapper provides permanent shelter; and (2) the wrapper is permanent — once money is inside an ISA, the tax-free status lasts for life, regardless of how large the balance grows. If the best ISA rate is within 0.5% of the best non-ISA rate, the ISA is generally worth choosing for the long-term flexibility it provides.