Earn 5% on your easy-access savings

It's still possible to earn 5% on easy-access savings, if you know this cheeky trick...

Everybody wants to earn a good rate of interest on their savings, although it's not exactly easy when interest rates are so low.

Instant-access savings accounts are faring the worst, with average rates still well under 1%. And while the top fixed rate bonds will pay 5%, to get this rate you are forced to lock your money away for five years. Which is no good if you need to get your hands on your cash quickly, is it?

At the same time some current accounts are paying enormous rates of interest -- as much as 5% AER. See below for three of the highest paying:

So why not just open one of these current accounts and transfer your savings into it. Who cares whether it's labelled a current account or savings account? It doesn't matter - right?

Unfortunately it's not that straightforward, as these super high interest current accounts come with strings attached. But it is easy to work the system to your advantage.

Here's how to do it...

Jumping through hoops

The current accounts shown in the table above have all introduced minimum monthly funding requirements. This is to try to encourage you to use the account as your primary current account, and to have your salary paid into it.

With the Santander and Lloyds TSB accounts you must deposit at least £1,000 a month while Alliance & Leicester (A&L) requires at least £500.

Of course, this may well be significantly more than you actually intend to save each month.

But don't be put off. With all three of these accounts you are able to withdraw as much money as you have in credit. So you could make your minimum monthly payment one day, and withdraw it all (or some of it) the next day.

Get the balance right

The interest rates on offer from these providers are also only available up to a maximum limit, so if you have a large savings pot you need to be careful. For example the Santander and Alliance & Leicester accounts above only pay 5% on balances up to £2,500, and anything on top of that attracts interest at just 0.1%.

The Lloyds TSB account is slightly different, as the 4% interest rate is only paid on balances between £5,000 and £7,000. You need to maintain your balance within this tier or else attract a lower rate of interest on all of your money.

More for your money

What if you have more than £2,500 in savings, and want to earn 5%? It is possible, but you need to be aware that both Santander and Alliance & Leicester limit the accounts above to one per customer. This applies to a single or joint account so you can't open one of each. Of course a couple could open a single account each and fulfil the minimum deposit criteria by shunting £1,000 back and forth each month.

It is also currently possible to open an account with Santander and another with Alliance & Leicester, despite them being part of the same group (Santander) so you could technically 'double your bubble' that way. Or even triple it by opening the Lloyds TSB account too.

It might seem like a lot of hassle, but remember that you can set up standing orders to do the transfers for you each month. And as a reward, you'll get instant access to your savings while earning as high a rate of interest as you'd get with the best five-year fixed rate bond!

Related how-to guide

Build up your savings

Here's how to get into the savings habit, find forgotten money, work out the real value of a savings rate and build up that emergency savings pot.

See the guide

Bonus rates

Sounds brilliant - so what are the other catches?

Well, on the Santander and Alliance & Leicester accounts, the interest rate includes a temporary bonus rate for the first 12 months, which effectively means the account is far less appealing after the first year.

However, in fairness bonuses have become more prolific across the market and are on many best buy instant access savings accounts as well.

The main difference is just how big the year one bonuses are on these current accounts -- the 5% AER drops to 1% after 12 months with both.

So you definitely need to remember to move your money once the year is up.

The Lloyds TSB account paying 4% does not include a year one bonus (though of course the rates are variable).

Other options

If jumping through the hoops above to boost your interest rate is just a step too far for you, there are other options.

One novel idea is to use the accounts as intended -- as a current account -- and move your banking to them. Then all you need to do is ensure your keep a sufficient balance to make the most of the high interest rates available.

But if you would prefer to keep your current account where it is, and have your savings in a standard savings account, one of the best instant-access deals is the Halifax Web Saver which pays a variable rate of 2.6% AER (this can be bumped up to 2.8% AER if you are a current account customer with Halifax).

Alternatively, the Tesco Internet Bank Saver pays 2.75% AER, but this includes a fixed 1.5% bonus for a year (on balances up to £100,000).

Finally, of course, if you are a taxpayer, a cash ISA could be a smart option. Although rates on ISAs look pretty low, with the majority paying less than 3%, because ISAs are tax-free the net return is higher than most easy access accounts. For example, a higher rate taxpayer would have to find an easy access savings account paying 5% to earn the equivalent amount of interest as an ISA paying 3%. Looks a lot more appealing now doesn't it?

Have you played the current account high-interest savings game successfully? If so, please share your experiences using the comments box below!

Want to build up an emergency savings pot? Read this goal to find out how to do it!

Compare savings accounts with lovemoney.com

This article has been edited and updated from an earlier version published last year.