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Best savings account for £20,000
Earn up to 6.25% with easy access, 5.25% tax-free or 5.21% in a fixed-rate bond.
The best savings account for £20,000 is likely to be the one that pays you the most interest while giving you the level of access that you need. You can usually get a better rate if you're willing to give a certain amount of notice before making withdrawals or to commit to not making withdrawals at all for an agreed period. Plus, since you can invest £20,000 each year into an ISA, your savings can earn you tax-free interest. We scour savings rates daily to help you find a good home for your hard-earned £20,000.
What is the best interest rate for £20,000 savings?
In terms of tax-free savings, Moneybox is currently offering 5.09% on an easy access ISA. If you're happy to give 30 days notice before making any withdrawals, then FirstSave is currently offering 4.85%. If you're happy to consider a fixed-rate ISA (where you won't be able to access your savings during the fixed term), you could earn 5.02% over 12 months with OakNorth Bank.
Outside of ISAs, you could earn 6.25% with easy access at Leeds Building Society, 5.45% on Market Harborough Building Society's 195-day notice account or 5.21% on ICICI Bank UK's 6-month fixed-rate bond (note that you typically can't access your money at all with a fixed-rate bond).
Summary of best rates on £20,000
|Best easy access
|Leeds Building Society – Shared Ownership Saver (6.25%)
|Best cash ISA
|Virgin Money – 1 Year Fixed Rate Cash ISA Exclusive Issue 10 (5.25%)
|Best fixed-rate bond
|ICICI Bank UK – SuperSaver Bond (5.21%)
|Best notice account
|Market Harborough Building Society – 195 Day Notice Account (5.45%)
|Best current account
Even greater returns may be possible with investment products such as a stocks and shares ISA, if you're willing to risk getting back less than you originally invested. Only consider stocks if you won't need to spend the money for several years (5 years is a widely-used rule of thumb).
How much interest will I earn on £20,000?
With £20,000 in Moneybox's easy access cash ISA paying 5.09% you'd earn £1,018.00 over a year, or £84.83 per month. Aldermore's 4.5% 30-day notice account would pay £900.00 over a year (£75.00 monthly), while OakNorth Bank's 5.02% 1-year fixed-rate ISA would pay £1,004.00 over a year (£83.67 monthly).
For those who have already used their 2023/2024 ISA allowance, or who are willing to consider forfeiting access to their savings altogether for the duration of a fixed-rate bond, Market Harborough Building Society's 5.45% 195-day notice account would pay £1,090.00 over a year (£90.83 monthly) on £20,000, while ICICI Bank UK's 6-month fixed rate bond would pay £1,042.00 over a year (£86.83 monthly).
Will my £20,000 be safe in a savings account?
£20,000 is well below the £85,000 limit that the FSCS (Financial Services Compensation Scheme) pledges to compensate in the event that a UK bank or building society (authorised by the Prudential Regulation Authority, which you can check on the Financial Services Register) goes bust.
This limit is per person, per bank (or building society). So bear in mind that if you already have £75,000 invested with say, Virgin Money, and then you open a new Virgin Money savings account with a further £20,000, then £10,000 of your overall holdings with Virgin Money would not be covered in the event that the bank collapsed.
What about a current account?
Traditionally, current accounts haven't paid great interest, and many people prefer to hold their savings in a completely separate account. However, some current accounts are now offering interest rates capable of rivalling savings products. Bear in mind that if you've used your personal savings allowance for the 2023/2024 tax year (£1,000 of interest for basic rate taxpayers, £500 for higher rate and for additional rate), then the interest you earn in a current account will be taxable.
Kroo is currently paying 4.35% on balances in its current account.
You can also check out today's bank switching offers, which pay out a one-off sum. You won't even need to transfer your £20,000 for this, but other "strings", like minimum monthly contributions, do usually apply.
Frequently asked questions
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