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Savings accounts

FIND AN ACCOUNT THAT COULD HELP YOU SAVE MORE

  • Compare high-interest savings accounts
  • Compare different types of accounts to suit your needs
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What is a savings account?  

A savings account is an account where you can set money aside and keep it separate from your everyday spending. You’ll earn interest on what you save so, over time, your pot of money will grow.

Some accounts let you dip into your savings whenever you want to, while others require you to leave the money untouched for a set period.

What’s happening with interest rates on saving accounts?

The Bank of England base rate – which affects interest rates on savings accounts – was cut earlier in 2025. At the last vote in June, it was held at 4.25%, but experts predict it may be cut again later this year. If this happens, savings rates are also likely to fall. 

But even though rates are following a downward trend, many top savings accounts still outpace inflation. That means money held in high-interest savings accounts isn’t just sitting still, it’s growing in real terms. Now could be a good time to lock your savings into a fixed-rate account to maximise your returns.

What types of savings accounts are there? 

There are lots of different savings accounts available, including:

Easy-access savings accounts 

Most easy-access accounts let you withdraw money whenever you need it. 

Because you can typically get your hands on your money quickly, an easy-access account is a good way to save for emergencies. But interest rates can be a little lower compared with other types of savings account.

Fixed-rate savings account  

A fixed-rate savings account, also known as a fixed-rate bond, guarantees a consistent interest rate for a specified period.

If you can afford to lock your money in, you typically get a higher rate of interest with a fixed-rate account. But if you need to access your money before the agreed period ends, you might pay a penalty or lose any interest you’ve earned.

Notice accounts 

A notice savings account requires you to notify your savings account provider before you make a withdrawal. In return, you often earn a higher interest rate than with an easy-access account.

The notice period typically ranges from a week to six months. Some accounts may limit the number of withdrawals you can make in a year, so always check the terms and conditions for any restrictions.

Regular savings account  

Also known as a monthly savings account, this type of account is designed to help you build up your savings steadily over time. They typically come with strict rules, such as requiring you to deposit into them every month, capping how much you can save, and limiting how many withdrawals you can make. 

They tend to offer higher interest rates than many other types of savings accounts, but this is often because they have an introductory bonus rate for the first year – so remember to switch when your rate drops.

High-interest current account

A high-interest current account may pay better rates than some savings accounts and gives you easy access to your money. 

You might have to pay in a minimum amount each month or maintain a certain balance in the account. And the high interest rate is typically only paid on balances up to a set limit or for a particular amount of time.

Cash ISA  

There are two main types of cash ISA:

Easy-access cash ISA – allows access to your money at any time, but tends to offer lower interest rates than fixed-rate ISAs. Rates are usually variable. 

Fixed-rate cash ISA – offers a fixed interest rate that’s often higher than an easy-access cash ISA, but you have to lock your money away for a set term. Some fixed-rate ISAs offer the flexibility of a limited number of withdrawals.

Stocks and shares ISAs

These let you hold investments in a wide range of shares, funds, trusts and bonds. You won’t have to pay tax on what you earn from the investments.

You need to be aware that the value of your investments can go up and down, so you could get less back than you put in to a stocks and shares ISA.

You can’t compare stocks and shares ISAs with Compare the Market.

Lifetime ISA

Designed to help you save towards a first home or retirement, with the added bonus of a 25% government top-up (maximum of £1,000) each year. You can open a Lifetime ISAs (LISA) if you’re aged 18-39. 

Lifetime ISAs are available as both cash ISAs and stocks and shares ISAs.

You can’t compare Lifetime ISAs with Compare the Market. 

Junior ISA

You can save for your child’s future in a junior ISA (JISA). Any cash in the account belongs to your child, but they’re not allowed to take money out until they turn 18.

You can’t compare junior ISAs with Compare the Market. 

Children’s savings accounts  

If you’re looking to give your child a head start for when they’re older, you can open a children’s savings account for them.

You can’t compare children’s savings accounts with Compare the Market.

Which type of savings account is best for me?

The right type of savings account for you depends on your goals. Here’s a simple guide to help you decide:

If you want to build up an emergency fund

If you want a pot of money to cover unexpected expenses, you need a savings account that gives you quick access to your money. 

An easy-access savings account lets you withdraw money whenever you need it, although some accounts limit the number of withdrawals you can make in year and there might be a short wait before you can get hold of your money. 

If truly instant access is important to you, look for an instant-access account. Typically, you can make unlimited withdrawals directly from the account.

If you want to save little and often

If you want to save a relatively small amount every month, consider a regular savings account. They typically offer a higher rate of interest than other savings accounts, but you’ll have to commit to making a deposit every month and won’t be able to pay in huge sums.

If you don’t need to access your cash any time soon

Want to lock in a high interest rate? A fixed-rate savings account could be right for you. By agreeing to lock your money away for a set period (term), you can often benefit from a higher return on your savings. The downside? If you need to access your money before the term ends, you’ll likely have to pay a penalty charge.

If you want to save for an expensive purchase

Are you saving for the holiday of a lifetime, a wedding or a new car – and won’t need immediate access to your money? A notice savings account could be ideal. You’ll typically earn a good rate of interest, but you’ll have to plan any withdrawals in advance and give the account provider notice.

A fixed-rate account or cash ISA might also suit you.

If you want to save for your first home or retirement

If you’re aged 18-39, you could open a tax-free Lifetime ISA (LISA). With these accounts you earn interest from the provider and the government adds an annual bonus of 25% (up to £1,000) too. The catch? If you’re using the money for a property you must be a first-time buyer and the property can’t cost more than £450,000. Alternatively, you’ll need to wait to withdraw the money until you turn 60. Withdraw the cash for any other purpose (unless you’re terminally ill) and you’ll pay a 25% penalty.

If you pay tax on your savings interest

If you’ve reached your personal savings allowance limit – i.e. you’ve earned £1,000 in interest if you pay the basic rate of tax; £500 if you pay the higher rate – then you could consider a cash ISA. You won’t pay tax on the interest you earn and you can now pay into multiple ISAs of the same type in the same year (except for LISAa and junior ISAs), as long as you don’t exceed your annual ISA allowance. 

If you don’t pay tax on your savings, and most of us don’t, then you could still consider putting your savings into a cash ISA if it offers the highest interest rate available.

If you want tax-free profits and you’re comfortable investing

A stocks and shares ISA could be a smart choice if you’re looking to grow your money over the long term without paying tax on your profits. But you’ll need to be comfortable with risk and leaving your money in there for a few years, particularly in turbulent market conditions.

A stocks and shares ISA can go up and down in value, so never invest more than you can afford to lose.

How does compound interest work?

If you earn interest on your savings and leave it in the account, you can then earn more interest on the interest itself – this is called compound interest.

This can keep happening, meaning the amount you have in your account gets bigger and bigger – even if you don’t pay anything in.

This illustrative example shows the impact of compounding – although you can earn far more than 2% on your savings right now. 

You start with a deposit of £5,000 and don’t make any additional payments. Interest is added at a rate of 2%. In year one, you earn just over £100 in interest. In year five, you earn just over £109. Your total interest earned over the five years adds up to just over £525.

Year Year’s interest (compounded monthly) Total interest Balance
Year 1 £100.92 £100.92 £5,100.92
Year 2 £102.96 £203.88 £5,203.88
Year 3 £105.07 £308.95 £5,308.95
Year 4 £107.12 £416.07 £5,416.07
Year 5 £109.32 £525.39 £5,525.39

To work out how much interest your savings account might earn, you can find a range of compound interest calculators online.

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How much should I be saving?

MoneyHelper advises you have three to six months’ worth of essential outgoings in an easy-access account. 

This emergency fund will allow you to cover unexpected expenses, such as repairing a boiler or having to buy a new washing machine. But it will also give you a financial cushion should you lose your job or split up with your partner, for example.

Read more in our guide to setting up an emergency savings fund.

Author image Guy Anker

What our expert says...

“Getting into a savings habit is crucial for a number of reasons. It can give you access to funds in an emergency, it can add to what you plan to live on in later life and it can give you an element of financial security. 

“But don’t just settle for any old account. It’s common for the top deals to pay far higher sums of interest than accounts offered by some high-street banks or in legacy accounts, so it can pay to keep on top of your savings. 

“For example, on a £10,000 balance, a two percentage point swing can net you an extra £200 per year in interest.”

- Guy Anker, Expert in personal finance, insurance and utilities

What should I consider when comparing savings accounts?

When you compare savings accounts, think about:

  • Interest rate vs access – most easy-access accounts offer a lower interest rate than other savings accounts. But higher-interest accounts typically have restrictions on when you can access your money.
  • Minimum and maximum deposit – some accounts can be opened with just £1, while others might need you to deposit much larger sums. Some savings accounts have a maximum balance.
  • Tax-free interest – an ISA can help you maximise your tax-free earnings.
  • Protection – the Financial Services Compensation Scheme (FSCS) protects up to £85,000 of savings, per person, per UK-regulated financial institution (not per account). You can use the FSCS checker to check your savings are protected.

If you only have a small amount to save, some high-interest current accounts might pay higher rates of interest on balances up to a certain level. These may be worth considering over a savings account.

Frequently asked questions

Who can open a savings account?

You’ll need to be a UK resident to open an ISA.

Other than that, it’s up to each account provider to set their own rules. You may have to be 16 or 18 for some types of account, and some banks might reserve their best-paying savings accounts for customers who have a current account with them.

Some small building societies may restrict their accounts to people who live in their area. For example, the Ipswich Building Society only offers its savings accounts to existing members or people who live in its local postcode areas.

Make sure you check the eligibility rules for any account you’re considering.

Can I open a joint savings account?

Yes, most savings accounts are also available as joint accounts, although some providers may require one of you to be an existing customer first.

You can’t, however, open a joint ISA. That’s because it’s an Individual Savings Account intended for one person only.

Can I have a savings account if I have bad credit?

A poor credit history shouldn’t be a barrier to opening a savings account. Most banks don’t carry out credit checks with this type of financial product because there’s no borrowing involved. So, bad credit shouldn’t affect your application.

How often is interest paid?

Interest is usually paid monthly or annually, depending on the savings account you have.

Do I have to pay tax on the interest my savings earn?

You won’t have to pay tax on interest for an ISA as it’s a tax-free account.

Interest from other types of savings accounts counts as income, and how much tax you pay depends on how much interest you earn.

Basic rate taxpayers have a personal savings allowance of £1,000, so most people won’t need to worry about paying tax on their interest. If you’re a higher-rate taxpayer, your personal allowance drops to £500, while additional rate taxpayers don’t get an allowance.

If you do go over, you’ll pay tax on any interest over your allowance at your usual rate of income tax. That’s 20% for basic taxpayers and 40% for higher-rate taxpayers.

How can I be sure my savings are safe?

If you’re covered by the Financial Services Compensation Scheme (FSCS), then deposits up to £85,000 are protected. But that limit applies to all your money held with that banking group, so if you have several savings accounts with them or a current account too, your total balance will need to be below £85,000. If it’s a joint savings account, up to £170,000 is protected as the limit is per person.

I have debts. Should I pay those off before I start saving?

If you have outstanding credit card debts subject to high rates of interest, it might be advisable to pay those off first, before thinking about putting money away. That’s because you’ll almost certainly be paying a higher rate of interest on debts like loans and credit cards than you’ll be earning in savings interest. Once you’ve cleared your debts, you’ll have more money and can save faster.

If, on the other hand, you’re paying off your credit card in full every month and keeping up your mortgage payments for example, it might be a good time to start saving.

How does inflation affect my savings?

Everything you buy is influenced by inflation. If inflation rises, so will the cost of everyday goods – for example, groceries, fuel etc.

If your savings account interest rate is lower than the rate of inflation, you’ll be losing out because the money earned won’t buy you as much as it did a year ago.

If you want to make the most of your savings, make sure the interest rate you’re getting is higher than the rate of inflation.

What are introductory bonus rates?

Some savings accounts offer high interest rates as incentives for new customers. But once the introductory period is up, you could be left with an interest rate that’s much lower. It could be a good idea to stick around for the introductory rate, and then compare and switch again.

Always check the terms of the introductory rate, as breaking certain rules could mean you lose it – for example, if you withdraw money before the end of the introductory period.

Can I have more than one savings account?

Yes, you can have multiple savings accounts as long as you meet any requirements set by the account providers.

Can I take my money out of a savings account whenever I want?

Easy-access accounts allow you to take your money out whenever you want, although some may specify a maximum number of withdrawals a year.

Most fixed-term accounts will charge you a hefty penalty if you make a withdrawal before the end of the fixed period.

What is the best savings account for my children?

The best savings account for your children might depend on how old they are, and if you want them to have access to their savings. For example, with a Junior ISA, your children won’t be able to take any money out until they reach 18.

After a certain age, children can apply for a savings account themselves too. But under 16s may need a parent or guardian to go with them into a branch, so always check the details of the account.

How do I open a savings account?

This depends on the account you choose. Some accounts are opened and managed online or on the phone. Others require you to go into a branch or apply by post.

Use our comparison tool to easily see what you need to do, to open the account – it’ll be in the next steps box for each individual account.

What do you need to open a savings account?

Once you’re ready to apply for an account, you’ll need to have the basics to hand – your address, occupation and current bank details. You may need to prove your identity with a passport, driving licence or energy bill, particularly if you haven't banked with that provider before.

If you want to open an ISA, you’ll need your National Insurance number too.

How do I close a savings account?

This will depend on your account provider. You might be able to close some accounts online, while for others you might have to visit a branch. If you have a fixed-term savings product, you might not be allowed to close it before the end of the term. Or if you do, you may have to pay a significant penalty.

If you want to move your ISA to another provider, you’ll need to complete a transfer form. You shouldn’t close the account with the original provider without doing this, as you won’t be able to reinvest that part of your tax-free allowance again.

I already have a savings account. How often should I review it to see if it’s still right for me?

It’s a good idea to regularly compare the market to make sure your money is still in the best savings account for you. Interest rates can change, new accounts and even new banks become available, and your own personal circumstances might change, too.

Page last reviewed on 27 JUNE 2025
by The Editorial Team