Savings Accounts Features
Savings accounts are provided by regulated banks and building societies in the UK and come in various forms ranging from short term notice accounts typically 7 day, 30 day, 60 day or 90 day through to longer term savings accounts which typically range from 12 months to 60 months notice. With a savings account you benefit from interest being added either monthly or annually.
Type of Savings Account |
Savings Account Features |
Savings Account Access |
Instant Access Savings Account |
Will normally offer higher interest than what can be obtained on a current account. |
Instant access or easy access |
Cash ISA Savings Account |
A Savings Account within a Cash ISA where interest can be earned tax free. |
Depends on account. Some have instant access and others will operate on a notice basis. |
Fixed Rate Notice Savings Account |
With these types of savings account you have to give notice before you can take money out e.g. 7, 30, 60 and 90 days. |
An interest penalty will often be applied if notice is not given. |
Fixed Rate Bond |
Usually 1, 2, 3, 4 or 5 year saving terms with a minimum deposit. |
Designed for money to be held for full term. Early withdrawal may result in a penalty. |
Structured Deposit Plans |
Usually 3, 4 or 5 year saving terms with a minimum deposit. |
Early withdrawal may result in a penalty. Designed for money to be held for full term |
As the above accounts are deposit based you will get back your original deposit plus any interest owed unless the bank or building society gets into serious financial difficulty. In the unlikely event that this happens the FSCS may be able to pay compensation of up to £85,000 per account holder.
Things to look out for when choosing a Savings Account
There is a wide range of savings account deals to choose from so we have highlighted some of the features to look out for:
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Minimum deposits – some accounts require a minimum level of funding
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Additional bonus rates – Many savings accounts offer a “Special bonus” which is paid at the end of a set period typically 12 months. There are often conditions attached and savers should bear in mind that once this special bonus is paid ongoing interest paid may not be competitive.
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Interest calculation method – some savings account providers will pay interest monthly and others quarterly or annually.
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Tax – Interest paid on your savings is treated as income and you may have to pay tax on it depending on your circumstances. If you don’t pay tax you can receive interest gross if you complete tax form R85. Some accounts will pay interest gross and it is up to you to declare any tax owed to the Inland Revenue.
With interest rates at the time of writing at an all-time low the impact in real terms of inflation on your money is not to be underestimated in eroding the buying power of your hard earned cash. Use our savings account comparison tables to ensure you get a good savings rate.