The best savings accounts for 2025? banking experts reveal predictions for savers

INTEREST rates on savings accounts levelled off last year – but what’s in store for 2025?

Savings rates surged in 2023 following successive Bank of England (BoE) base rate rises.

Any rise in the base rate is designed to slow inflation and also sees savings rates go up.

But with the base rate peaking last year and then ratesetters dropping it from 5% to 4.75% in November and keeping it there in December, savings rates have started to fall.

What’s in store for 2025 though, and which banks and building societies offered the best deals in 2024?

The Sun spoke to Moneyfactscompare.co.uk and Hargreaves Lansdown to find out their predictions for the year.

Moneyfacts also revealed the best buy tables for savings accounts for each month of 2024.

We then crunched the data to find out who appeared in those tables the most times across the 12-month period.

What will happen to savings rates in 2025?

At the time of writing, the base rate stood at 4.75%, down from 5% previously.

Further rate cuts are expected in 2025, with the Governor of the BoE Andrew Bailey previously stating there could be as many as four.

However, steadily rising inflation since then, has seen the central bank opt for a more cautious stance.

Last month, Mr Bailey said the central bank needed to make sure inflation, which sat at 2.6% in the 12 months to November, returned to its 2% target on a “sustained basis”.

He added “a gradual approach to future interest rate cuts remains right”, signalling there might not be as many as four in 2025.

Any cuts, while good news for mortgage holders who will see their interest rates, spell bad news for savers.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “There are expectations for interest rates to drop next year if stubborn inflation starts to settle.

“This will be bad news to savers as we could get several cuts to the Bank of England base rate, which tend to get passed onto variable savings accounts relatively quickly.”

It’s not all bad news though, Rachel said.

She revealed there are a number of challenger banks bucking the trend of slashing fixed rate bonds in a bid to draw in more business so it’s worth keeping an eye on these for the best rates.

A number of new providers are hitting the market too, which could lead to more competition and savers offered more choice.

Meanwhile, Mark Hicks, head of active savings at Hargreaves Lansdown, added: “We expect fixed rates to stay relatively stable, and potentially rise as the likelihood of significant rate cuts is taken off the table.

“We expect easy access rates to remain under pressure given the BoE is likely to cut rates twice in 2025 and these products are quite correlated to the base rate.

“Therefore, fixed rate products are likely to the best to secure some very attractive returns where savers can still earn in excess of 2% above inflation.”

The best banks and building societies for savings accounts in 2024

The Sun looked at how banks and building societies compared on eight types of savings accounts across 2024.

These were: fixed one-year bonds, fixed on-year cash ISAs, variable cash ISAs, easy access without a bonus, notice, monthly interest, regular savings and children’s savings accounts.

Across the fixed one-year bond sector, which offers savers a fixed interest rate for a set period of time, Union Bank of India (UK) Ltd appeared in the best buys tables 12 times.

Meanwhile, SmartSave and Close Brothers Savings appeared 12 and eight times, respectively.

Across the fixed one-year cash ISA savings accounts, which reward savers with a fixed interest rate for a set period of time and any interest earned is tax-free, four major banks appeared the most times.

Virgin Money, Shawbrook Bank, Close Brothers Savings and Charter Savings Bank all featured 10 times in the best buy tables.

In the variable cash ISA savings accounts, where the interest you earn is not fixed, West Brom Building Society featured 14 times.

Meanwhile, Zopa and Plum appeared 10 and nine times, respectively, in the best buy tables.

In the easy access without bonus sector, which, generally, let savers withdraw their money without penalty whenever they want, cahoot appeared the most times – 14.

Meanwhile, Monument Bank and Oxbury Bank cropped up 12 times each.

Vanquis Bank topped number of appearances for notice accounts, showing up 21 times.

These type of accounts let you withdraw money after a set notice period, of usually between 30 to 180 days.

Vanquis Bank also topped the best buy table for savings accounts paying monthly interest, with 23 appearances.

Principality Building Society showed up 26 times in the regular savings accounts best buy tables.

Regular savings accounts are where you have to commit to saving a certain amount each month.

Lastly, Saffron topped the charts for children’s savings accounts with 13 appearances.

It’s worth bearing in mind, the banks and building societies above featured in moneyfactscompare’s best buy tables the most in 2024.

But that doesn’t mean they offered the highest savings rates across the year.

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