The record low in interest rates in the UK as set by the Bank of England is making it extremely difficult to get any decent return on your savings in 2011
Recently, inflation figures in the UK came out at 4.4%, yet interest rates continue to offer a return below the rate of inflation. The best interest rates currently available are struggling to reach 3%.
The best 
way to get the most competitive online high yield savings accounts in 2011 is to look at online comparison site money supermarket or money savings expert.
These are the two dominant comparison sites online at the moment. Here you will find deposit takers that offer a reasonable rate of return on their high yield savings accounts as an alternative to placing your money with one of the high street banks or building societies.
Go online get the best rate of return on your savings
In order to get the best return on your money, it is advisable to place your money on a fixed notice period high yield savings account. If you place your money on instant access, the rate of return is always lower as a bank cannot control money being deposited or withdrawn.
With a notice account
which requires anywhere of a month upwards of notice to withdraw funds, it means a bank can plan its cash flow and lend money out as long as it maintains its capital adequacy ratios. It rewards long term notice account holders with a better rate of return.
When looking online for the best high yield savings account it is always worth reading the small print to make sure that if you withdraw money before the required notice period there is not a penalty fee that has to be paid. Sometimes this can be quite punitive.
High yield savings accounts still exist in this low rate environment
For a comprehensive overview of the best high yield savings accounts and rates currently available online please visit this very useful page on personal finance bible, money supermarket.com.
You might be pleasantly surprised, we
certainly were by the rates offered by savings providers particularly in the current low interest rate environment.
Indeed, according to Money Supermarket, ING direct are offering an incredible 3.12% on an instant access savings account. The Nationwide comes in a close second at 3.06%, with The Post Office coming in second and offering a surprisingly competitive savings rate at 3.01%.
All of these account providers offer an instant access notice period so you don’t have to worry about locking your money away for a lengthy period of time.
If you want to learn a bit more about the different types of savings accounts out there, feel free to watch the short video below which talks about saving in regular savings accounts to more sophisticated offerings including lock up and equity linked accounts.
Money Management : Types of Savings Accounts
For more information on all aspects of online savings accounts please feel free to continue navigating our site.
{ 6 comments }
I am thinking of opening a high yield savings account with ING Direct. I have read the money spuermarket page. Do you think this is the best savings account on the market. I’m not just talking about the interest rate but also customer service etc?
Cheers
Hi Gavin,
I think there are a couple of things to consider here.
In terms of interest rate there are several different savings providers as well as ING Direct that all offer a similar rate with similar criteria.
Coventry Building Society, Derbyshire Building Society, Bank of Ireland and ING Direct all offer between 3.05 and 3.15% at the time of writing on their online savings accounts.
None of the above have withdrawal restrictions and all only require £1 as a minimum deposit to open an account.
What is very interesting is that all of these providers are covered by an £85,000 UK protection scheme.
The exception to this is ING Direct which is covered by a Euro 100,000 scheme which is backed by the Dutch government as ING is a Dutch Bank.
To answer your question: From what we are aware all the providers offer a strong customer service and all offer a similar rate of interest.
Perhaps the only thing to consider going forward is that ING is backed by a Dutch government protection scheme, whilst the other savings providers are backed by a UK government protection scheme.
For further information on the high yield saving accounts providers that we have mentioned above as well as others please visit this useful page by money savings expert
Are there any high yield savings accounts that involve some kind of share or stock market option to boost a little bit the return. I see your article mentions that it is possible to get around 3% or so on an instant access savings account. Its not really an attractive return as it doesn’t even keep up with inflation. Thats why I would be interested in one of these share linked products.
Hi Malcolm,
Your quite right, 3% is not an attractive return at all.
If you want to get a higher yield then this is possible with an equity linked savings account.
You should be aware however that to get any type of improved yield you will have to be prepared to lock your money away for a certain period of time and certainly won’t be able to get instant access.
Have a look at the HSBC Stockmarket linked savings account. You can find it by going to this link
The minimum investment is £3000 and the lock up period is 3 and a half years. It is a very straightforward product that promises you a 16% return if at the end of the product the FTSE 100 has not fallen below the level fixed at the start of the product. If it does fall below, then HSBC will still give you 2% per annum back on the investment.
In all honesty its a safe product which guarantees your capital and although not super attractive it does have its merits in this low interest rate environment. With interest rates set to stay where they are for the time being, an at worst return of 2% should the FTSE end below the level confirmed at the start of the product then this is not too far below the 3% you would get on an instant access savings at the moment.
Paul
Do you think there will be any change in the rates of interest that deposit takers will give as we move into 2012. Or do you think high yield savings accounts will remain at the same interest return levels as this year, 2011?
Do High yield savings accounts still exist in the UK? I don’t want to state the obvious but with the Bank of England base rate at half a percent what do you think actually constitutes a decent sanigs rate?