UK households are often looking for ways to make their money go further amid the cost of living crisis, and savings accounts could help you improve your finances this year.

The Bank of England’s (BoE) decision to cut interest rates to 3.75% from 4% last December brought relief to mortgage holders, but wasn’t exactly great news for savers as it influences the rates set by banks and building societies on their products.

Inflation remains well above target, even as data showed that the UK’s consumer prices index (CPI) fell to 3.2% in November from 3.6% in October. But the good thing is that most offers stated here pay above inflation returns.

Experts urge savers to shop around for the best deals and review their accounts regularly, as many may still be sitting on products that fail to beat inflation.

Mark Hicks, head of active savings at Hargreaves Lansdown, said: “Inflation may have eased, but it’s still running streets ahead of high street savings.”

He said that it was “more important than ever to shop around and consider online banks and savings platforms, because there are still plenty of accounts leading the pack, way ahead of inflation”.

“For money you don’t need for a specific period, it’s also well worth considering locking in a fixed rate deal now,” Hicks added.

Sarah Coles, head of personal finance at Hargreaves Lansdown and a columnist at Yahoo Finance UK, noted: “Savings rates will tend to follow the Bank of England, all things being equal, and it seems likely they will trend downwards in 2026.

“However, there’s a huge amount of competition in the savings market, as providers push for market share. Rates have stayed relatively steady and robust, despite an expected rate cut in December, and you can still make more than 4%.

“There are some particularly competitive deals available from online banks and savings platforms, so it’s well worth checking out what’s on offer if you haven’t switched for a while. Both easy access rates and fixed terms have risen in the past two weeks on our Active Savings platform as competition heats up.”

Cash ISAs, she added, continue to be in high demand as their rates remain “relatively robust”.

“Savers have flooded into the product over concerns that the cash ISA limit could be cut,” said Coles. “Now we have had confirmation that this will happen in 2027, we will see more people taking advantage this tax year and next. Banks and building societies may also want to fill their coffers while they can.”

Read more: Lower returns for savers as NS&I cuts interest rates on British Savings Bonds

Victor Trokoudes, founder and CEO at smart money app Plum, said: “Savers will need to prepare for a rate cut to their savings and shop around to make sure they’re getting the best rates, as variable products will likely see an interest rate cut following the base rate decision.

“The main high street banks have been slower to pass on increases in the base rate to customers, so it’s important to explore other options – smaller banks, building societies, and fintechs are usually quicker to offer higher rates on savings accounts, including cash ISAs.

“Against a challenging economic background, people are looking for competitive interest rates for their cash savings with tax-free returns. Plum has recently extended its bonus offer to cash ISA transfer-ins, so customers can get higher returns not just on cash ISA deposits from this tax year, but transfers from previous years as well.

“It’s paramount that customers consider a range of options to secure better long-term returns for their money, especially if interest rates return to a downward trajectory, like a stocks and shares ISA.”

Reeves announced changes to the tax payable on savings income. From 2027-28, the basic rate on savings will be increased by 2 percentage points to 22%, the higher rate will be increased by 2 percentage points to 42% and the additional rate will be increased by 2 percentage points to 47%. This will take effect from 6 April, 2027.

Until recently, savers could earn a market-leading 5% for three months, but the best offer is now 4.5% from GB Bank via the Prosper platform on a six-month term. Interest is paid monthly or at maturity, and a minimum investment of £20,000 is required to open the account.

Union Bank has a 4.33% one-year deal. Interest is paid at maturity, and you can invest from £1,000 to £1,000,000.

Hampshire Trust Bank pays 4.31% on a five-year term. Interest is paid annually, and you need only £1 to open the account.

Online banks typically offer higher rates than traditional bricks-and-mortar branches, which translate into better returns, giving you a more efficient way to save and reach financial goals.

If you prefer to go with a familiar name, the high-street lenders have slightly lower offers, but are still above inflation.

Tesco (TSCO.L) Bank offers the highest rate among high-street lenders, with a one-year fixed-rate savings account that pays 4.10% annually, with the minimum balance required being £2,000. However, you can invest up to £5m.

NatWest (NWG.L) has a fixed-term savings account offering 3.6% for one year. The minimum deposit is just £1 and interest will be paid on the first business day of every month and on the maturity date.

Unlike easy-access products, where interest rates can vary, fixed-rate accounts earn a set rate of interest for the period you choose, whether that’s six months or several years. Those are the most common deals, but some offers go up to 10 years and over.

You must leave your initial deposit for a fixed period without making withdrawals. If you touch your money, you forfeit any interest.

Easy-access savings accounts let you withdraw your money without notice. With that ease of access come lower interest rates, but they are a good option for those who think they might need their money in a hurry.

Be aware that rates on these accounts are variable, which means they can go up or down. You will be notified of any change ahead of time.

Read more: UK mortgage rates unlikely to fall much further despite expected interest rate cuts

Chase (JPM) has a 4.5% offer for 12 months that you can access with just £1.

Mansfield BS has a 4.25% offer which you can open from £1 and save up to £400,000. If you were to put £1,000 in this account, your balance after 12 months would be £1,042.50.

Manchester BS has a similar 4.25% deal which you can access with only £1 and invest up to £1,000,000. Interest is paid annually.

There are even higher-paying easy-access accounts, but they are not for new customers. Santander’s (BNC.L) Edge Saver, for instance, offers 6%, but is only available to current account holders.

Can’t decide on whether you want to put your money away and not touch it for a long time or keep it accessible at all times? Maybe you should consider a notice savings account.

Notice savings accounts require you to give notice to your savings provider before you can withdraw your funds.

These are ideal for those who know when they might need their cash but don’t want to face the temptation of dipping into it at any time.

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You need to give the bank or building society a set advance warning before you can withdraw your money. It’s usually between 30 and 120 days, though this can be longer.

Earl Shilton BS pays 4.50% on a 180-day period notice, with the minimum deposit set at £5,000.

OakNorth Bank via Prosper has a 4.40% deal that requires £10,000 to access. The notice period is 120 days and it is only available to new customers.

GB Bank offers 4.33% on a 120-day deal that can be accessed with just £1,000.

Interest rates with notice accounts are variable, which means they could go up or down over time.

For those looking to make the most of their cash savings, regular savings accounts can offer returns of up to 7.5%.

Most regular savings accounts require you to put money away each month with interest paid yearly. It is not uncommon for the offer to be available only to current customers.

Principality offers 7.5% in a six-month regular saver account. You open an account and pay in up to £200 each month. Interest is calculated on the money in the account each day and paid six months after opening.

Zopa pays 7.1% on monthly deposits of up to £300. Account holders also receive 2% AER interest on all balances and 2% cashback on bill payments and there is no minimum monthly deposit.

The Co-op offers 7% on its regular savings account, allowing deposits of up to £250 a month.

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First Direct pays the same 7% but you can save £300 every month.

Every deal mentioned here is covered by the Financial Services Compensation Scheme, so you are protected up to £120,000 or double that if it’s a joint account.

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