Eligible deposits with UK institutions are protected by the Financial Services Compensation Scheme (FSCS) up to a maximum level of protection of £85,000 per person per institution. All new savings or bank accounts provided to UK customers are now covered by the FSCS.
DisclaimerAll rates subject to change without notice. Please check all rates and terms before investing or borrowing.
There are several types of savings accounts that you can choose from, depending on your financial situation and savings goals.
Easy access savings accounts, sometimes known as instant access accounts, are the most flexible type of savings account. Many allow you to make as many deposits and withdrawals as you choose, without any restrictions, which can be useful if you want to be able to dip in and out of your savings.
However, bear in mind that some accounts, particularly those paying higher interest rates, may limit the number of withdrawals you can make. Also, these accounts pay a variable rate of interest, which means the rate could change at short notice.
Fixed rate bonds typically pay higher rates than easy access accounts as you agree to lock your money away for a specified period. The rate is guaranteed for the duration of the fixed term.
You will usually only be able to deposit into the account for a limited period after opening and won’t normally be able to access your savings until the end of the term. Fixed rate bonds offer terms ranging from several months to several years.
Notice accounts are like a halfway house between easy access and fixed rate savings. You will often be able to add to these accounts without restriction but, when you want to withdraw any money, you will need to wait until the end of the specified notice period. Notice periods can typically range from 30 days up to six months.
If you don’t have a lump sum to put into savings but instead want to deposit a sum of money into a savings account every month, regular savings accounts may be worth considering. These accounts typically require you to deposit a minimum amount each month and may set restrictions on withdrawals. Because of the conditions related to these accounts, regular savings accounts can often pay relatively high rates.
Children and teenagers aged under 18 will find there are specific children’s savings accounts available. They may come with certain age limits and allow parents or guardians to manage the account until the child reaches a certain age. There are easy access and fixed accounts available.
Although you don’t need a savings account by law, most people will find them a useful way to manage their finances, build up their savings and earn interest on their money.
Savings accounts allow you to separate money that you’re putting aside for the future from your day-to-day spending money that you need for bills and shopping, for example.
If you use your current account for your savings, you may be tempted to spend this money instead of keeping it saved for emergencies, a house deposit, a holiday or any other goals. Furthermore, you would miss out on the higher rates of interest that savings accounts can offer.
Even if you don’t have a large sum to put into savings at the moment, opening a savings account and getting into a habit of making regular deposits can help to improve your financial stability. By building up your savings, you give yourself a financial cushion if your income drops or if you’re faced with an emergency expense, such as a car repair, which means you may be less likely to turn to expensive forms of borrowing to cover these costs.
When comparing savings accounts and deciding which one is right for you, there are several points to consider.
It should be fairly straightforward to open a savings account. Depending on the account you choose, you may be able to open it online, by mobile app, in a branch or over the phone, for example.
You will usually need to provide some personal details, including your full name, date of birth and address history, when opening a savings account. You may also need to show some proof of ID, such as a driving licence, so the provider can verify your identity.
These identity checks don’t involve any credit checks and won’t affect your credit score.
You may also need to provide other information during the application process, such as details of another bank or building society account that will be “linked” to the savings account for deposit and withdrawals, for example.
Once you’ve provided all the necessary details, you will usually need to deposit a minimum sum to open the account. This could be as little as £1 or as much as £10,000 or more.
Bear in mind that many providers require you to be a UK resident and to confirm that the UK is your only country of residence for tax purposes.
There’s no limit to the number of savings accounts you can have. You may like to have a mixture of accounts, such as an easy access account for any emergency expenses and one or more fixed bonds for your longer-term savings.
The interest rate on a savings account tells you how much of a return you can get on your savings. To help you compare accounts, the interest rate is displayed as an annual equivalent rate (AER), which tells you how much you could earn over the course of one year including any compounding interest or bonuses, for example.
All savings providers should be regulated by the Financial Conduct Authority (FCA) and, under the Financial Services Compensation Scheme (FSCS), up to £85,000 of the money you have saved with a provider is protected if it goes bust. Bear in mind that if one or more providers share a banking licence, this limit applies to your total deposits with these providers.
Savings accounts and individual savings accounts (ISAs) are both places where you can build up your savings. The main difference between them is that any interest you earn on a savings account above your Personal Savings Allowance (PSA) is taxable, whereas any interest you earn on an ISA is completely tax-free. Read more on the differences between savings accounts and ISAs.