Choosing The Right Savings Account For You

Hope Harvey

Let’s break down the complex world of savings accounts. There are many different types of savings accounts and it really depends on your personal situation as to what account you might need. So, this article is going to try and help you figure out which one will be best for you and your financial goals.

Remember to research the specific terms and conditions that each bank offers. 

Regular Savings Account

As the name suggests, these types of accounts require you to save regularly - think little and often. You commit to saving a certain amount of money for a certain amount of time. Interest rates tend to be quite high for these accounts but alternatively, you won’t be able to deposit a lump sum. 

Easy Access Savings Account

This is the most similar to a current account in that you can withdraw your money whenever you need to, but as a result the interest rates won’t be as high - good for those you may need access to savings at any time. 

Cash ISA

In order to save £20,000 a year (tax-free!), then you may want to consider opening up a Cash Individual Savings Account (ISA). With easy access and a sense of security, this could be the account for you. Just bear in mind that interest rates are not as high as the accounts with more limitations. 

LISA (Lifetime ISA)

Otherwise known as the Lifetime ISA, this is the account for first time buyers aged 18 to 39. You can save up to £4,000 a year and in addition, the Government will top this up by 25%, so definitely start researching these if you’re making the move! However, if you withdraw the money for any other reason (other than retirement), you will lose the bonus and some of your money too. 

Fixed Rate Bonds

If you don’t need access to your money right away or you are saving for something in the future, then try putting your money into a fixed rate account where it is locked away and you know what you will receive once the designated time period is over. However, you will face a penalty if you withdraw your money prematurely. 

Notice Account

Similar to Fixed Rate Bonds, in these accounts, your money is locked away but instead of waiting for a set time period, you have to give an agreed period of notice to withdraw your money. This is a good account for those who don’t need instant access to their savings and may need some more discipline when it comes to setting money aside. 

High Interest Savings Account

As it says on the tin, High Interest Savings accounts give you a higher interest rate than regular accounts. The catch is that they tend to come with terms and conditions which may include a higher initial deposit, agreed monthly deposits or withdrawal limits. 

This diagram is a great tool to help you figure out the best savings account for you based on your goals and current financial situation:

Diagram By Money Supermarket.

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