Best high interest account for inheritance lump sum

[PersephoneParlormaid]

I’m getting an inheritance (£100k) and I want to put it an a high interest account and just leave it there. Yes I’ll be using it for an ISA every year. Looking for an account where I can just pay it in and leave it is driving me mad. The ones I’m looking at are ‘savings’ accounts so they want you to pay in every month.
Is there a bank where I can just deposit my money and get good interest?

Watching as in same position. Often the advice is to max out premium bonds which doesn’t seem to be such a good move these days.

I’ve got a lot of PB’s and they are performing worse than a bank account. Looking to take them out when I find a good bank account.
Having looked on line and at MSE there’s lots of banks offering high interest for 12 months etc, I just want an account where I can put my money in and forget it, while getting a good interest rate.

Look at National Savings and Investments (not premium bonds). They have savings accounts that accept up to 1 million in deposits. Obviously you’ll need to pay tax on the interest. They have guaranteed income bonds which you can choose a term for, I’m not sure about savings accounts with no term attached, I would expect that the interest rates will be lower as they want your money in for as long as possible hence higher interest for longer terms.

The base rate is 3.75% and is expected to stay there for the rest of the year (although of course world events may affect that). So I'd be surprised if you found a savings vehicle offering genuinely high interest, tbh

You won’t be able to forget about it unless you put it in a long fixed term deposit account, where the interest is guaranteed for the term. Otherwise, savings accounts providers can change interest rates as long as they give the right amount of notice.

if you don’t want to use the money for at least five years, I’d strongly recommend that you look at investing within a stocks and shares ISA. The Vanguard Lifestrategy funds are a good place to start.

Are you planning to use the money in the next few years or is it long term savings? If you dont need it for, eg a house deposit or anything then why are you keeping it all in cash? You aren't going to get anything high interest in the long term in cash. Even the best rates are around 4% with most of these being fixed term where the interest plummets after the fixed term. You will also never beat inflation so the value of the capital will be eroded over time.

It’s long term savings. Ideally I’d put it away and use the interest for holidays etc.
I know about ISA’s, which I will move it into yearly, but it’s the now. It’s currently sitting in a current account earning nothing.

Martin Lewis is really good
for this sort of advice.

Sounds like you're looking at regular savings accounts if they want regular deposits. These are designed for saving relatively small amounts of money each month. You won't get that interest rate on a lump sum.

If you're looking at a lump sum with instant access that's what you need to look for.

Chase often pays the best rate although you sometimes need to be a new customer. Failing that, I have a Coventry Building Society account that pays 4.25% unless you make more than 3 withdrawals a year.

But, like a PP says, you should probably consider investing at least some of it if you're not needing it in the next few years.

If you dont need the capital you would be better putting most of it into S&S. You will get a better return than keeping it as cash. You could gradually filter it into ISAs over a few years. You will have to pay tax on the interest over £1000 or £500 if you are a higher rate tax payer until you get it all in to ISAs.

There are pros and cons of the different ways of doing it. For example, you could look for 5 year fixed interest rate accounts. Pros - you know what the rate is, you just leave it alone, it could turn out you have locked in a good rate. Cons - you can’t access it, it could turn out you have locked in a bad rate of interest rates rise.

With instant access, they are likely to variable rate, meaning the bank can change the rate at any time. And yes, to get the best rate you will be chasing the ‘bonus for one year’ types.

With ISAs, they have to let you have access to your money so even with a 5 year rate you can break it, but you normally pay an interest penalty for doing so.

If you want to avoid the hassle of switching banks, look at something like Hargreaves Lansdown active savings. You won’t get absolutely the top rates, but switching is much easier as you don’t have to open a new account every time.

Just be aware that you will need to pay tax above £1k if you work and earn higher than the personal allowance threshold. Assuming you put it in 20k in cash ISA now before the new tax year, and right after the new tax year, you could put away £40k in cash isa to minimise getting taxed. The remainder, assuming you could get an interest of 4%, will give you a return of £2.4k. But £1.4 k will be taxed at 20%.

Taking the interest for holiday is fine in theory, but it means that your £100k is actually losing its worth due to inflation as time goes on.

And from next year will be taxed at 22%.
you could the balance in a fixed rate one year bond and then move to an ISA for tax year 2027/2028 and then repeat until all invested in ISAs. Note that from 2027 the cash ISA amount will be reduced to £12k if you are under 65.

Moneyfacts comparison site has a much longer list of accounts than MoneySavingExpert so I would check that. There are a few accounts that track either the base rate or an average savings rate. They won't have the top rate but will be near the top. Look at OakNorth bank and Family Building Society.

£20k in an isa each side of April (trading 212 has a good rate), then maybe lump it in monument or cahoot or any other account, there are loads, check MSE for the best rates. NS&I and prem bonds won’t let you keep up with inflation.

I know you said cash, but if you don’t need the money yet, consider a S&S ISA, the market is low so favours buying (not advising, just suggesting an alternative to look at)

You could also look at LHV current account which tracks the base rate and then access their savings rate at 4.25%.

My partner has a significant amount of savings in Nationwide, tied in for a year but it had a decent interest at the time.

Atom Bank offers about 4.4% for a year on savings accounts.

https://www.moneysavingexpert.com/savings/savings-accounts-best-interest/

This lists some of the best savings accounts at the moment.

I’d you are married you could both max out ISAs for this tax year and then again in early April so that would be £80k of it sorted

charter savings bank often have good rates and easy access

You can put £20k into an ISA now if you are quick. Trading 212 have a cash ISA paying 4.65 percent for one year if you apply through money saving expert site. It took me about 5 minutes to do it. After April 6th you can add another £20k. In future years I think RR has made the most an under 65 pay in to a cash ISA each year to be £12k. The rest of the money could be deposited into a 2 or 3 year savings bond.

I’ve already got this years ISA

Can I ask what your account is called? The ISA is at 4.25%. The only one I can see paying 4% is a locked in account, no withdrawals. Thanks

I’ve always had a fear of S&S, but maybe now is the time to look at it. I just don’t want to end up with less than I put in.

In in an a/c that a certain amount has to go in monthly , just set up a dd for the amount they want to go in from one a/c into it and then that amount back out to the original a/c .