Introducing flexibility to your savings so you can access them when you need to, easy access savings accounts make for a great emergency cash cushion
An easy access account is a savings account that generally pays higher interest than many current accounts while giving you the flexibility to withdraw money when you need to.
As savings accounts can traditionally make it more difficult to withdraw money and involve monthly payments, savers who’d like to opt for a more flexible option tend to turn to easy access accounts.
An easy access account allows you to withdraw money without having to give notice while still offering competitive interest rates. Other advantages include:
Generally speaking the more restrictions and conditions on an account, the higher the returns will be. As an easy access account places more importance on being flexible, you may find higher interest rates with alternative savings accounts, or even some high-interest current accounts.
There may also be some restrictions on how many cash withdrawals you can make.
With easy access accounts you pay for flexibility, so it depends on how you’re planning to use your savings.
If you’re saving funds for cases of emergency like a car breakdown, instant access accounts make sure you can dip into your savings easily. The interest rates won’t be as competitive, but you’ll still earn some interest on a yearly basis.
This is a good option if you’re just hoping to put a lump sum aside and let it collect interest as you aren’t held to any monthly payments and it takes minimal action on your end.
If your main goal is to earn the highest possible interest rates, and you’re happy to make a long-term commitment, then an easy access account might not be right for you. A regular Cash ISA or savings bond might be a better option – it can mean you’ll earn more interest but accessing your money is made a little more difficult. You always have the option of opening two different savings accounts, so you won’t have to settle for one and you can dedicate each for different purposes.
There are a number of ways to open your new easy access account – you can usually either pop by the bank in person, set up an account online, or contact them over the phone. It’s worth noting that you may need to own a current account with the bank provider before you can set up a secondary easy access account.
An easy access savings account doesn’t usually require a large deposit to set up. It can vary between providers and accounts, but deposits often sit somewhere between £1 and £100. If you head over to our MoneySuperMarket comparison tool, you’ll be able to see the minimum amount required when comparing deals to help you make an informed decision with all the information you need already provided.
An instant easy access account allows you to withdraw money from your account just like you would from a current account – instantly and with no penalties. You’re likely able to withdraw money with only a cashcard, using an ATM or by visiting a branch.
However, an easy access account takes a short waiting period before you can take out your money. You may need to transfer the money from your easy access savings account to your current account before you can access the money, but with internet and mobile banking this tends to be relatively hassle-free.
Easy access accounts almost always offer variable rates of interest, which means the rate on your account can go up or down at any time. The amount of interest you earn on your savings depends on several different factors, however.
These include the kind of savings account you have chosen as well as the Bank of England base rate, which is the official interest rate for the UK. So it’s worthwhile to keep an eye on the interest you’re earning. If it no longer looks competitive, we recommend moving your savings to an account that offers better interest rates.
While you have the option of earning monthly interest rates, in most cases easy access accounts only pay interest yearly.
When shopping around for a suitable easy access account, it’s a good idea to consider:
Interest rates are often referenced using AER to make it easier to compare rates. It assumes that you’ll keep your money in your account for a year, in order to calculate the interest.
You can check your account’s AER to find out how much interest you’ll earn. This will take into consideration the effects of compound interest which happens when the interest you’ve earned on your savings itself earns interest.
Bonus rates often only apply as an introductory rate and usually end after a set period of time, especially when it comes to easy access accounts. If you are considering an account which includes a bonus in the rate, check to see whether it is variable or fixed.
A fixed bonus will give you some peace of mind as it can’t drop during the bonus period. When it’s variable, however, which is more likely the case with an easy access account there is a possibility that it could fall over time.
Savers who prefer not to have to move their money frequently may prefer an easy access account which doesn’t include a bonus. However, it’s best to keep an eye on how much interest you’re earning, as returns could still fall.
In 2016 the new personal savings allowance was introduced so that a majority of taxpayers won’t have to pay tax on the interest they earn on their savings. Taxpayers fall into certain groups based on their income to determine how much they’ll be taxed.
Basic-rate taxpayers can earn £1,000 of interest on their savings before they have to pay any tax while higher-rate tax payers that earn more than £43,500 can earn £500 of gross interest a year tax-free. Anyone earning upwards of £150,000 won’t be able to benefit from the personal savings allowance.
If the interest you earn exceeds these limits, any tax you owe will usually be collected via the Pay As You Earn (PAYE) system or via your self-assessment tax return.
If you’re considering opting for an easy access account, comparing the best options will help you find the right deal for you. Taking into account your saving habits and how much you are hoping to pull together, we’ll provide you with tailored options for you to benefit from.
You’ll be able to compare interest rates and any other rewards and benefits that may be of interest when making a decision. It’s a good idea to include current accounts in your search in case there’s a high-interest current account that could have you benefit from higher interests than you could with an easy access account. Simply tell us a little about your saving goals and we’ll make sure to come back with some suitable options for you to choose from.