How to get the best interest rates: step-by-step guide for savers and borrowers
Interest rates determine how much you earn on savings or pay on loans, and knowing how to get the best interest rates can significantly boost your finances. In the UK, with the Bank of England base rate at 5% in 2025, savers can aim for returns above 3% while borrowers seek APRs under 7%. This guide covers practical steps for both, helping you compare interest rates and avoid common pitfalls to maximise your money.
Understanding interest rates for savers
The core insight is that a good interest rate for a savings account in the UK is 3% or higher in late 2025, outpacing inflation around 2%. This benchmark comes from adjusted data showing stability after Bank of England decisions. Rates like these protect your purchasing power and grow your pot over time.
What makes a good savings rate in 2025
A strong savings rate exceeds the base rate minus fees, typically 3-4.75% for top easy access accounts. For instance, top easy access savings rates reach up to 4.75% as of October 2025, according to MoneySavingExpert. Anything below 3% lags behind inflation, eroding value, so target high-yield options from online providers offering better deals than high street banks.
Types of savings accounts
- Easy access accounts: Flexible withdrawals with rates around 4-4.75%, ideal for emergency funds.
- Fixed-rate bonds: Locked for 1 year at up to 4.5%, suiting those who won’t need the cash soon, as per MoneySuperMarket.
- ISAs: Tax-free versions of the above, maximising net interest for higher earners.
Choose based on liquidity needs; fixed options guarantee rates but penalise early access.
Factors affecting saver rates
The Bank of England base rate directly influences offerings, held at 5% in 2025 per Flagstone. Provider competition, your deposit size, and FSCS protection (up to £85,000) also play roles. Online banks often lead with best high yield savings accounts UK due to lower overheads.
Step-by-step guide to maximising savings interest
To how to maximise savings interest, start by assessing current earnings, then switch providers for 0.5-1% gains on larger sums. This process can add hundreds annually without risk.
Shop around and compare providers
Use sites to compare interest rates across best savings accounts. Look for AER (annual equivalent rate) including compound interest. Prioritise FSCS-protected options from challengers like Atom Bank over traditional ones.
Switch to high-yield options
Transfer funds online in minutes; many offer switch bonuses. For example, move to accounts beating 4% to see immediate growth. Track tax implications via personal savings allowance (£1,000 tax-free for basic rate taxpayers).
Consider fixed vs easy access
Fixed suits long-term if rates fall; easy access for flexibility amid current interest rates UK volatility. Weigh penalties against potential rate drops from BoE changes.
| Provider | Rate (AER) | Term | Min Deposit | FSCS Protected |
|---|---|---|---|---|
| Chip | 4.75% | Easy access | £1 | Yes |
| Plum | 4.75% | Easy access | £100 | Yes |
| Shawbrook Bank | 4.5% | 1 year fixed | £1,000 | Yes |
| Barclays | 3.5% | Easy access | £1 | Yes |
Quick tip for savers
Review accounts quarterly; a 1% rate hike on £10,000 saves £100 yearly. Use apps for automated transfers to high-yield pots.
Securing the lowest rates as a borrower
Low interest loans start with a solid credit score; borrowers with scores above 700 can access best personal loan interest rates around 6.1% APR. Focus on pre-approvals to shop without dinging your score.
Improving your credit profile
Check your score via Experian (free) and fix errors. Pay debts on time and reduce utilisation below 30%. A higher score unlocks best mortgage rates UK, often 4-5% fixed for primes.
Loan types and rate benchmarks
Personal loans average 6-10% APR; secured ones lower but riskier. Compare via eligibility tools; good credit gets 6.1% as in Bankrate’s 2025 tips, adapted for UK.
Negotiation and refinancing strategies
Ask lenders to match competitors’ offers. Refinance if rates drop, saving on variable mortgages. Avoid early repayment fees by timing switches.
Tools and tips for comparing rates
Effective tools like comparison sites reveal the best deals instantly, saving time and money on how to get low interest loans or high savings yields.
Using UK comparison sites
Platforms like MoneySuperMarket let you filter by rate and term. Input details for personalised quotes on everything from savings to current interest rates UK.
Monitoring BoE rate changes
Subscribe to alerts; a base rate cut boosts savers less but eases borrowing. Track via official BoE site for proactive switches.
Avoiding common pitfalls
- Ignoring fees that eat into net rates.
- Sticking with one bank; challengers offer better.
- Forgetting tax on savings over allowance.
For more on best interest rates, explore our pillar guide.
Frequently asked questions
What is a good interest rate for a savings account in the UK?
A good interest rate for a savings account in the UK is 3% or higher in 2025, beating inflation and base rate trends. This level ensures real growth, especially in easy access or ISA accounts protected by FSCS. Factors like provider type influence availability, with online banks often exceeding high street offerings for best high yield savings accounts UK.
How can I compare interest rates for loans?
To compare interest rates for loans, use FCA-regulated sites entering your details for soft-search quotes without credit impact. Focus on APR, including fees, for true costs on personal loans or mortgages. Tools highlight best personal loan interest rates, helping spot deals under 7% for eligible borrowers.
What affects interest rates for borrowers?
Interest rates for borrowers are affected by credit score, loan amount, term, and market conditions like BoE base rate. Poor credit pushes APRs above 10%, while strong profiles secure rates as low as 6.1%. Economic stability in 2025 keeps variables predictable, but shopping around mitigates lender markups.
Are high interest rates better for savers or borrowers?
High interest rates benefit savers more, earning up to 4.75% on deposits versus borrowers paying 6%+ APR. In 2025’s 5% base rate environment, savers see compounded growth, while borrowers face higher costs on variables. Balance by locking savers fixed and refinancing loans if rates ease.
How to switch to a better savings account?
To switch to a better savings account, check eligibility, transfer via CHAPS or online, and confirm rate guarantees. Many providers handle the process, preserving interest during moves. Aim for seamless shifts to accounts over 4%, watching for intro bonuses that boost how to maximise savings interest.
What are the best mortgage rates UK right now?
Best mortgage rates UK in late 2025 hover at 4-5% for fixed two-year deals, depending on deposit size and credit. Compare via brokers for tailored options, avoiding overlap with specialist guides. Fixed rates protect against BoE hikes, suiting long-term homeowners.
Apply these steps today to optimise your finances and avoid costly mistakes. For deeper dives, check our related guides.
