There’s no doubt that 2021 has been a miserable year for savers. Derisory savings rates have made it impossible to earn a decent return on cash. But did you know that there is now one account that pays 3% interest?
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What savings rates are available now?
Right now, if you stash your cash in an easy access savings saving account, the highest savings rate you can hope to earn is 0.66% AER variable, from Cynergy Bank. While this is the highest rate available, it includes a 0.36% fixed bonus that’s only in place for the first 12 months, so it probably isn’t the best place to keep your cash for the long term.
The next-highest easy access rate comes from Shawbrook Bank, which offers a slightly lower 0.62% AER variable. However, this doesn’t include any temporary bonus, so it could be a better option if you’d prefer a straightforward rate.
While these rates are the highest on offer if you want easy access to your money, for those happy to lock their cash away it’s possible to earn 1.35% AER fixed for one year, via Zopa. Alternatively, Zopa pays 1.59% AER fixed for two years, while JN Bank pays 1.81% fixed for three years.
While these fixed options easily beat easy access accounts on interest rates, if you choose to open one, bear in mind that you won’t be able to access your cash for the duration of the fixed term. This also means that should general savings rates rise in future, you could miss out.
To see more options, see the list of our top-rated fixed savings accounts.
How can I earn 3% on my savings?
While I’ve touched on the top-rated easy access and fixed accounts, you’ll have noticed that these accounts all pay nowhere near the current rate of inflation, which is 3.1%. This means that if you stash your money in any of these accounts, your cash is effectively losing value.
The good news is that there is one account which pays 3%, which almost matches the current inflation rate. This means that it is possible to protect the value of your savings. However, to open this account, you must have been a member of Cambridge Building Society for at least a year.
If that includes you, then you can open the Cambridge Reward Regular Saver, which pays 3% AER interest fixed for one year.
As its name suggests, its a regular savings account, so you can only add cash every month, rather than being able to deposit a lump sum. Despite this, the account does allow you to deposit a hefty £250 each month. Plus, there’s no obligation to pay in every month.
Sadly you can’t make withdrawals willy-nilly with this account. That’s because you have to pay a 90-day interest penalty on anything you take out from the account. While this isn’t ideal, if you don’t need access to your cash for a year, it could still be a winner.
Have you been with the Cambridge Building Society for at least three years? If so, you can earn an even greater 5% AER fixed interest for one year with its Extra Reward Regular Saver.
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What other regular savings accounts are available?
If the Cambridge Building Society account isn’t for you, then existing NatWest or RBS current account customers can earn 3.04% AER interest through a regular savings account with either of these banks. However, you can only save a maximum of £50 per month. The rates are also variable, which means that they could change at any time.
If you’re not a Cambridge Building Society, NatWest or RBS account holder, then Coventry Building Society has an account open to all which pays 1.05% AER variable. While it’s headline interest rate isn’t outstanding, it’s still comfortably above the rates offered on normal easy access accounts. Plus, you can save up to £500 per month. This makes it possible to earn 1.05% on a decent amount of cash.
Unfortunately, any withdrawals will be subject to a 30-day interest penalty on the amount you withdraw.
For even more options, see the list of our top-rated regular savings accounts.
The post Fed up of dire savings rates? Here’s one account that pays 3% interest appeared first on The Motley Fool UK.
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