With so many types of savings accounts out there, it can be difficult to know what would suit you best. That’s why we’ve made this handy flowchart.
This is a general guide to choosing a savings account. Individual accounts may have certain restrictions. Please read and understand the terms of any account before you apply.
If you’re still confused as to what each account type entails, here’s a brief description of each:
An easy access account does what its name implies, giving you access to your cash without requiring a notice period, making them ideal for an emergency pot. That said, some accounts do limit the number of withdrawals you can make, so always check the details before committing.
A notice account generally offers slightly better rates than you’d be able to get on easy access accounts, under the provision that you give your provider some notice before withdrawing money from your account.
A monthly interest account can be many things – for example an easy access, notice or fixed rate account – but the one thing all these deals have in common is that they pay interest on a monthly basis. This could be useful for compounding or taking an income from your savings.
A regular savings account allows savers to put a little away each month. While they tend to offer some of the highest rates of interest, they come with a maximum amount that people can put away every month and a minimum number of payments that must be made, and they do not generally allow access until after a year.
A fixed rate bond gives you a set rate of interest for an agreed-upon amount of time, but you will usually have to give up any chance to access the account until the end of the set period. A fixed rate cash ISA is the tax-exempt equivalent.
A variable rate cash ISA can be the equivalent of either an easy access account or a notice account, but with additional limitations due to the nature of ISAs. In return, you can be safe in the knowledge that your savings won’t be taxed even if you earn more than your personal savings allowance (£1,000 for basic rate taxpayers) in interest.
A stocks & shares ISA is a tax-free vehicle that allows savers to invest in the stock market for the chance to get higher returns (though they are subject to investment risk and savers may end up with less than they put in). Stocks and shares ISAs should be considered long-term investments.
A children’s savings account allows parents (and others, once opened) to save money for a child’s future. The child in question may have their own access to the account, depending on the provider. A Junior ISA is the tax-free equivalent, which only allows access at the age of 18.
If more than one of these account types appeal to you, don’t worry; it’s usually a good idea to have more than one type of account as you work towards varying financial goals. Do note that you can only open one new cash ISA per tax year and there are limits to how much you can invest.
Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.