Savings rates explained: easy-access, fixed and regular savers
Quick answer: Savings rates depend on the account type and the Bank of England base rate (4.25% now). Easy-access accounts let you withdraw any time but pay variable rates, fixed-rate bonds pay more if you lock money away, and regular savers offer the highest headline rates on small monthly deposits.
There is no single best savings account — the right one depends on when you will need the money. This guide explains the three main account types, why rates move, and how tax affects what you actually keep. We do not publish rate tables or take commission, so use a comparison site for live rates once you know which type suits you.
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Primary source: https://www.bankofengland.co.uk/monetary-policy/the-interest-rate-bank-rate
Easy-access, fixed and regular savers
Easy-access accounts let you pay in and withdraw whenever you like. They suit your emergency fund and short-term goals, but the rate is variable and can drop with little warning, so it pays to review it a couple of times a year.
Fixed-rate bonds pay a guaranteed rate for a set term, usually one to five years, in exchange for locking your money away. They suit money you are sure you will not need until the term ends — early access is normally not allowed or is heavily penalised.
Regular savers offer the highest headline rates but only on small amounts paid in each month (often 50 to 500 pounds), and they usually require you to hold the provider's current account. They are ideal for building a habit rather than housing a large lump sum.
Why your rate changes and what AER means
Variable savings rates tend to follow the Bank of England base rate, which is 4.25% as of May 2026. When the base rate falls, easy-access rates usually drift down too; fixed bonds are unaffected once opened.
Always compare the AER (Annual Equivalent Rate). It shows the rate over a year including how often interest is paid and compounded, so it lets you compare accounts on a like-for-like basis regardless of whether interest is paid monthly or annually.
Tax on your savings interest
The Personal Savings Allowance lets basic-rate taxpayers earn 1,000 pounds of interest a year tax-free, higher-rate taxpayers 500 pounds, and additional-rate taxpayers nothing. Interest above your allowance is taxed at your normal Income Tax rate.
If you are likely to exceed your allowance, a Cash ISA shelters interest from tax entirely within your 20,000 pound annual ISA allowance. HMRC usually collects any tax due by adjusting your tax code rather than sending a bill.
Common questions
Is a fixed-rate bond better than easy access?
Only if you are certain you will not need the money during the term. Fixed bonds usually pay more, but you typically cannot withdraw early, so keep your emergency fund in easy access.
Do I pay tax on savings interest?
Only on interest above your Personal Savings Allowance (1,000 pounds for basic-rate, 500 pounds for higher-rate, nil for additional-rate taxpayers). A Cash ISA keeps interest tax-free.
What does AER mean?
Annual Equivalent Rate. It expresses the interest rate over a full year including compounding, so you can compare accounts fairly even when they pay interest at different frequencies.