If you are looking to save up to make a big purchase, then you may want a separate account to put a designated amount in each month. Most savings accounts offer compound interest, i.e. interest upon interest, which is a nice way for your savings to earn you a small amount of money.
There are many different types of banking savings accounts, from easy access, to fixed bond accounts. All these accounts offer you a place to store your money where you can add to it as often as you want to save up to make a big purchase, or to have something saved away for a rainy day.
This guide is designed to help you apply what you want from a savings account so that we can point you in the direction of the best account for you.
Notice Saving Accounts
If you want to gain a high amount of interest on your savings, then a notice account may be suited to you. With a notice account you cannot immediately access your savings, but must give minimum 30 days’ notice as to when you would like to access the money in your account. The notice period can go up to 120 days, and this length of time can earn you higher interest.
Simply speaking, the less you try to access your savings with a notice account, the higher the interest you can get.
Instant Access Savings Account
An instant access savings account offers a lower rate of interest than a notice savings account, but this in turn allows you to access your savings instantly, allowing you to withdraw from, and put money in to, the savings account with a need for notice.
A term account allows you to open an account which offers the same interest rate throughout the term of the account. These interest rates may be higher than what is offered by most savings accounts. However, the bank may require a high deposit amount for you to be able to open the account and you cannot add to or take any money from the deposit amount for up to 5 years.
An ISA, or an Individual Savings Account, provides you the opportunity to build your savings without paying tax on the interest.
A regular saver account allows you to input a certain amount of money per month in return for competitive, and often fixed, interest rates. The bank may enforce a limit on how much you can put into the account every month so check with your provider before applying.
A regular saver account may restrict your access to your money as determined by the terms and conditions, so make sure you read up on each account before making a firm decision!
That all sounds great…but how does interest work with a savings account?
Interest is the amount of money that can be paid to you based on the amount of money in your account. For example, if your account has £1000 in it, and your interest is 5%, then you could earn £50 on your savings. The regularity of interest paid changes between accounts, being paid daily, monthly, or annually. You can earn up to £1000 a year on your savings without paying tax for most taxpayers, so make sure you look around for the best interest rates!
How do I get a savings account?
This is the simple part! Just like any other account you must go through your bank when you apply. You can apply for a savings account over the phone, in person, or online.