Help for savers as rates remain stuck at rock bottom

Piggy bank

The average instant-access account in the UK is paying just 1.03%, the Bank of England announced today.

The Bank's latest "effective interest rates" announcement for March 2013 shows a fall of 0.05 percentage points in the rate paid on instant-access products, from February's 1.08%.

It also said that savers are now getting, on average, a return of just 2.81% on their bank and building society savings accounts.

The news confirms that there has been no let up for the UK's beleaguered savers in recent weeks, as people's savings pots are eaten away by the cost of living.

Inflation currently stands at 2.8%, as measured by the Consumer Prices Index (CPI), and the Bank of England has said it expects it to pass 3% by the end of the year. Moreover, four years after the Bank base rate hit a historic low of 0.5%, some commentators are claiming it could stay there until 2017.

With that in mind, we've looked at the best-paying bank and building society accounts in the UK.

Find the best Cash ISA or savings account for you

As ISAs are exempt from income tax, savers need only find an account paying 2.8% to beat inflation. For non-ISA accounts, MoneyFacts says a basic-rate taxpayer needs a savings account paying 3.5%, while a higher-rate taxpayer needs an account paying 4.66%.

The top easy-access account without a bonus is the Nationwide e-Savings Plus paying just 2%. Beyond that, a 90-day notice account with United Bank UK is paying 2.26% (minimum investment £1).

You will receive better returns if you lock your cash away for a fixed period or commit to saving regularly: a five-year fixed rate bond with Skipton Building Society is paying 3% (minimum investment £500); while a Bank of Scotland monthly saver with a minimum monthly payment of £25 is paying 3.25%.

Back to cash ISAs. The top variable rate ISA without a bonus at the moment is the NS&I Direct ISA paying 2.25% (minimum investment £1), but you will get a better rate if you opt for a fixed-rate product: notably, the five-year bond from Principality, paying 3.10% (minimum investment £500).

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