Savings Accounts

As of April 2016, the average saving account pays a measly 0.06%! But you CAN earn more, if you're smart. By comparing banks, you can find savings accounts that offer as much as 3% or even 5% interest!

Make the most out of your money without locking it away for longer than you can afford

Whether it's high interest or tax-free find the right account for you!

 

Need to know

  • ALWAYS pay off your debts before saving, otherwise you will end up wasting money paying interest (the exceptions here are Student Loans and Mortgages)
  • Whether you have a lump sum to save or want to save a little every month you have LOADS of options. You can put your money away for different amounts of time, at different intervals and with different levels of access to your money. Generally the harder it is for you to get at your money, the HIGHER the interest rate
  • The two types of interest offered are variable and fixed rate.  Fixed rate means your interest will stay at the advertised level, variable means you need to keep an eye out and be prepared to move accounts if the interest levels drop
  • If you are willing to sacrifice interest for a chance of a BIG WIN then have a look at premium bonds. If you can afford to risk your money for a higher (and tax free) return have a look at Stocks and Shares NISAs
  • ISAs now allow you to save up to £15,000 tax free. You can split this any way you want between a Cash ISA and a Stocks and Shares ISA and you won't have to pay a penny of tax on your interest.   
  • You can also open a Help to Buy ISA if you're saving a deposit for your first home. The government will give you 25% on top of whatever you save, up to £12,000. But remember, you can only put money into one cash ISA per tax year. 
  • You don’t want to be paying bills out of your savings account as it will damage the interest you could be earning. For an active, everyday account look at Current Accounts
  • Savings accounts in the UK from regulated institutions are protected by the Financial Services Compensation Scheme. This means that you can have up to £85,000 of your savings repaid to you per institution- or if you have larger savings than this it is safer to spread them around to ensure you’ll be fully compensated
 

Types of accounts

Cash NISA - A savings account where you do not need to pay tax on any interest earnt. Different NISAs will have different rules on accessing your savings. For more details see this guide

Regular Saver - You commit to paying on a monthly basis and generally can’t touch your savings for 12 months. These have VERY high interest rates AND it is calculated on a monthly basis so the amount you get back will gradually rise as your savings do

Easy/Instant Access - Depending on the account, you can access your savings straightaway or with a  short amount of notice

Notice Account- You can access your savings with an agreed amount of notice, normally 30, 60 or 120 days

Fixed Rate Bond - These accounts lock your money away for 6 months to 5+ years. They offer good interest rates for the current market BUT you will be unable to switch your money over to a better account if the rates rise

Peer to Peer lending - You commit your money to fund a borrower's loan. These are not FSCS protected, however the regulating company do not hold your money, rather they act as a facillitator (and credit checker) for the loans, for more details check out this guide

 

Type of account

Highest interest

Access

Best for?

Cash NISA

2%

Variable

Tax free savings

Regular Saver

6%

Generally none

High interest for gradual savers

Instant access

3%

Instant

Anyone who needs   constant access

Notice accounts

1.25%

30-180 days notice

Confident savers

Fixed rate bond

1.95%-2.8%

6 months- 5 years

Securing a good interest rate

Peer to Peer lending

5.2%

Variable days- years

Getting a high return on a lump sum

 

 

Compare Savings Accounts

 

The inside track

  • There are savings accounts that are tailored to a specific cause to help you focus on a certain goal like Christmas Savings
  • Some banks and building societies offer 'first home accounts' these accounts generally do not allow a withdrawal until your target amount is reached and will reward you if you then take out your mortgage with them
  • Children's savings accounts have tax free interest but NEVER be tempted to put your savings into a children's account as the Inland Revenue would not be happy!
  • For more information on saving for children, see this guide to Junior ISAs
 
 

Biggest Savers

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