Savers’ interest rates have been at a low for several years, and the most recent emergency base rate cut by the Bank of England means they’ve been falling even further.
There are a number of different types of savings account, and we’re here to help guide you through what they all are and how they work – this way you’ll be able to decide which is the best for you.
The easiest way to find the most suitable type of savings account is by comparing your options:
Decide which type of saving account you want,
whether it's a flexible saver you can access
when you need to or a fixed-rate account you'll
Compare your options before you open an
account, so you can find one with the right notice
period, minimum and maximum deposit, and
account management options
Using a savings account
While a current account is for every day banking, a savings account enables you to set money aside for a future goal, or simply build a rainy day fund or nest egg. You choose the type of saving account that suits your requirements.
Easy access accounts
If you think you’ll need to access your savings at short notice, an easy access savings account could be a good option. These are often the best savings accounts for savers who want to withdraw their cash with little or no notice, however this flexibility means interest rates are often less competitive.
You can open this type of account through MoneySuperMarket. We can show you all the easy access savings accounts on the market, but we can only help you to open some of them.
Fixed rate bonds
Fixed-rate bonds are savings accounts that usually pay a set rate of interest, agreed at the beginning, for a certain period of time. They generally offer higher interest rates than easy access accounts, especially if you opt for a fixed-rate bond that lasts for two years or more.
They come with terms and conditions, however. Some will charge you a penalty fee if you need to make a withdrawal during the fixed term, while others - following a brief window when you can change your mind - will prevent you from making any withdrawals whatsoever across the term.
Cash ISAs will help you to take advantage of your annual tax-free ISA allowance: you can invest up to £20,000 and pay no tax on the returns. Some cash ISA accounts also allow you to transfer in money invested in the previous tax year so you can maximise returns on your tax-free savings.
Fixed rate cash ISAs
A fixed rate cash ISA will pay a guaranteed amount of interest for a set length of time. This could be one of the best savings accounts if you want to take advantage of your tax-free cash ISA allowance and can afford to lock your savings away for a few years.
If you want to be able to dip into your savings but don’t necessarily need immediate access, you might find that one of the best savings accounts could be a notice account. These pay a higher rate of interest than easy access accounts, but it takes longer to get your cash.
Children’s savings accounts
Even children can earn interest on their savings, and getting them a savings account is one way to get them more money-savvy earlier in life.
Offshore savings accounts
Offshore savings accounts can be useful if you live abroad or earn money in a different currency. However, they’re not usually protected by UK compensation rules.
Business savings accounts
Business owners have a lot to think about, from managing staff and clients, to sorting out cash flow. A good business savings account could help you to run your business more efficiently.
Which savings account is right for you?
There are various types of savings account you can compare and choose from, including easy access accounts, ISAs, fixed rate bonds and more.
It’s important to make sure your money is working as hard as possible, so regularly check you’re on the best savings rate.
These are the accounts available to open through MoneySuperMarket. We can show you all the accounts on the market, but we can only help you to open some of them.
Not sure what type of account to go for? Our Savings Decision Tree can help you decide.
Set a goal
When you’re choosing a savings account, having a goal in mind can help you decide what type of account is right for you. For example, if it’s an emergency fund you need easy access to your money, but with a long term target in mind you might go for something that rewards you for leaving your money alone.
How much should I save?
Our savings calculator is a great tool if you’re thinking about saving. If you tell us your savings goal, how much you can put away each month and what the interest rate of your savings account is, we’ll tell you how long you’ll need to save to reach your target.
Make sure you can access your account
Accounts often come with restrictions on how you manage them, such as in-branch, over the phone, online or through the post.
Pick your provider
If you already have a current account with a certain provider, it’s always worth checking if you can get preferential interest rates or other benefits on a savings account with them.
Spread your money
Under the Financial Services Compensation Scheme, the first £85,000 you have with an authorised bank or building society is protected – this rises to £170,000 for joint accounts. If you’re in the happy position of having more than £85,000, you might want to spread it around other savings account providers. Remember, the protection applies £85,000 per institution, not per account, so multiple accounts with the same institution will not be protected.
What is a savings account?
A savings account is a bank or building society account that pays interest on your money. It’s a good way to make your cash work harder than it might do in a current account, Some current accounts pay attractive rates of interest but usually have conditions attached, such as having to pay in a certain amount each month and running direct debits.
Should I switch savings accounts?
Who can open a savings account?
The minimum age for a normal savings account is usually 18, although a 16-year-old may open a cash ISA. There are accounts aimed at children and teenagers.
How do I open a savings account?
Most banks and building societies will let you open a savings account online, by phone, or in-branch, however not all financial institutions offer all the same options. You’ll also likely have to bring ID and proof of address – for example, your passport, driver’s licence, and a recent utility bill – though if you’re opening the account online you might be asked to send the documents by post or email. Your ID is used by the bank as part of their fraud checks to ensure you are who you say you are, but many banks also use databases and other sources of information.
How do I close a savings account?
To close your savings account, contact your bank in the required way - in-branch, online, etc. You may have to give a certain amount of notice. If you want your money sooner, you may lose some or all of your interest.
What happens when I switch savings accounts?
If you’re switching ISAs, you’ll have to fill out a transfer form with the new provider, which can often be done online. However, if you’re swapping normal savings accounts this will depend on your provider – some allow BACS transfers, some may require you to move the money to a current account, and some can even carry out a direct debit.
With a standard savings account, you should receive a cheque or an online credit with which to open your new account. Your new account provider should be able to advise if you need help. If you want to switch an ISA, never close the account. Tell your new provider that you want to make the transfer and they should take care of the paperwork. Closing the account would sacrifice that year’s tax privileges.
Can I add someone to my savings account?
Most savings accounts can be operated on a joint basis.
What is AER?
AER is the Annual Equivalent Rate, which shows you how much interest you earn on your savings.
What is simple and compound interest?
Simple interest is when the interest is calculated based on the original deposit, while compound means the interest is paid on the original sum plus any interest previously paid on the sum.
How do I report a savings scam?
We’ve been made aware of a number of ways in which fraudsters are trying to use the MoneySuperMarket brand to try and trick consumers in handing over money, or financial details, including false savings proudcts.
If you think you’ve been contacted by a fraudster, please stop all communication with them and report it to Action Fraud. If it’s someone impersonating MoneySuperMarket, please contact our customer services team.
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Savings account companies
Comparing savings accounts
You can compare savings accounts using a number of factors. These include the interest rates they offer as well as how long the rate will last, the amount you might need to deposit in order to open the account, and how you can access the account. Once you’ve decided which account you want, simply click through and you’ll be taken to the provider’s website.
Not sure what type of account to go for? Our Savings Decision Tree can help you decide.
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