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Before immersing yourself in our lovely selection of the best savings accounts & best savings rates, take a step back. Do you know what you need from a savings account?
Savings accounts can get pretty complicated, and are designed to meet different needs. There are many considerations to make when deciding which account to choose - it's far more than simply finding the best savings rate. So it’s good to get a handle on what it is you want, before jumping in…
Some accounts are only available to you if you can commit at least a certain minimum level. Be sure to check this before you get too excited about a rate you may not be able to have!
Just the word inflation can induce sleep in most people, but when it comes to your savings inflation is very important. Inflation, simply put, is the rate at which the value of things goes up; a good way to think of it is to think of how much £100 would have bought you 10 years ago, and then to think of how much it would buy you now. The difference between the two is the result of inflation.
Now if the rate of inflation is higher than the rate of interest you receive on your savings that means the actual value of your savings is going down. So you want to make sure that your rate of interest is greater than the latest rate of inflation to make sure you actually make money on your savings!
Knowing what type of taxpayer you are (reluctant doesn’t count!) is really important in determining what type of savings account you should opt for.
All savings accounts are liable for income tax at your marginal rate (the rate of tax that you pay) with the exception of ISAs. That means certain accounts are better for certain taxpayers.
At any rate, a Cash ISA is always a good first port of call for savings as any interest earned is entirely yours.
If you need to access your money instantly, then tying your savings up in a fixed rate bond may not be the best idea! On the flipside, if you don’t need access to your money for a while (you’re saving for your retirement for instance) having your money in an instant access (or no notice) savings account isn’t particularly good either.
If you use your savings as part of managing your cash flow (you dip into your savings, but then pay back into them regularly) an ISA isn’t best as you can only pay in up to your ISA limit once each tax year.
The usual options for the payment of interest are yearly or monthly (although other options such as quarterly do exist). Annual interest suits those best who don’t touch their savings often, whereas monthly interest is good for those such as pensioners, who have to derive a regular income from their savings.
We’re all different. Some of us prefer managing our accounts by popping down to the local branch in our lunch hour, some of us like to keep track of our finances in the evening using online banking. Whatever your preference, be sure the account you select can be operated the way that suits you.
Compare the best savings rates