What type of savings account do I need?

With so many different types of savings accounts on the market, it can be overwhelming trying to decide which one works best for you.

This guide will help you understand the different types of savings accounts to determine the most suitable account for your needs.

Types of savings accounts

When working out what savings account is right for you, considering your financial requirements and how you plan to use the account can be a good first step.

Easy Access savings accounts

An easy access savings account allows you to deposit and withdraw funds easily, making them a good option for short-term savings goals. These accounts pay variable rates and can be a good basic account to have for an emergency or general fund that you can access at short notice.

Keep in mind this accessibility typically comes at the cost of lower rates when compared to other savings products, with some accounts also limiting the number of withdrawals you can make in a given period.
Furthermore, their variable rate means that the amount of interest you earn could change depending on a wide range of factors, such as a change in the Bank of England base rate, consumer demand and whether a provider needs to raise funds.

You can compare these accounts on our easy access chart.

Notice savings accounts

Notice savings accounts also pay variable rates but require giving notice before you can access your cash, usually in exchange for better returns than their easy access counterparts. These notice periods can typically range from 30 to 180 days, with the best rates usually reserved for longer periods.

These accounts occupy a middle ground between an easy access account and a fixed-term bond for those who want to take advantage of higher rates without a long-term investment. Be sure to visit our notice account chart to compare the best rates in this sector.

Fixed rate bonds

Fixed rate bonds can be a great way to maximise your returns if you’re willing to lock your money away for longer. Ranging anywhere from six months to over five years, these bonds restrict access to your money until the term ends. As they offer fixed interest, this means that the rate you receive won’t change over the course of the term, which could protect your returns if interest rates lower, or cost you earnings if rates later rise.

These accounts could therefore be suitable for you if you have a lump sum to invest that you don’t plan on using for the time being, with a focus on growing your savings in the long-run. Find out more about the best fixed bond rates available.

Regular savings accounts

Regular savings accounts offer some of the highest rates on the market in exchange for making regular payments for a fixed period. If you find yourself with spare cash each month, and are willing to commit to making regular payments, these accounts can be a great way to steadily grow your savings pot.

Note that these accounts may restrict maximum investments and can sometimes revert to standard savings accounts once the term expires, so may not be suitable for large-scale savings. You can compare all regular savings accounts on our regular savings charts.

Children’s savings accounts 

Children's savings accounts are very similar to normal savings accounts but have additional restrictions to consider, such as lower maximum investments compared with adult accounts. These accounts can also have limits on withdrawals, where any money taken from the account must be for the benefit of the child. You can open a children’s savings account on behalf of a child under the age of 18.

As these accounts pay interest, they may be worth considering if you’re looking to help your child grow their savings. Keep in mind that if the account earns over £100 in interest from money deposited by a parent, then you may have to pay tax. Find out more by visiting our children’s savings chart.

ISAs 

ISAs are a type of savings account that allows you to earn tax-free interest on your cash. These accounts can be useful for those nearing the limit of their Personal Savings Allowance (PSA), but keep in mind that you can only deposit a maximum of £20,000 per year across all your ISAs, which is known as your ISA allowance.

There are various types of ISAs, including cash ISAs, stocks and shares ISAs, Innovative Finance ISAs, Junior ISAs and Lifetime ISAs. Whereas a cash ISA functions like a tax-free savings account, other ISAs can be used for more specific purposes. For example, a Lifetime ISA is aimed at first-time buyers or if you’re saving for your retirement, whereas a stocks and shares ISA could be for you if you plan to invest your cash. Meanwhile, a Junior ISA is only for under-18s and has a lower allowance of £9,000 a year.

Find out whether an ISA or a savings account is right for you.

Other savings considerations

The Financial Services Compensation Scheme (FSCS) protects any money you save with an authorised provider up to £85,000 per person across all accounts under the same banking licence.

Once you’ve decided what type of account is right for you, be sure to visit our savings charts to compare the best rates available.