Easy-access accounts

Easy-access savings accounts and Nisas pay you interest and offer unrestricted access to your money, but you should also check current account options and give more thought to long-term savings.

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Key points

  • Earn interest with unrestricted access to your money
  • May not be the best option for longer-term saving
  • Consider whether a current account could offer a better deal
  • Think about the pros and cons of an easy-access Nisa

Probably the simplest and easiest of all savings accounts is the easy-access account.

You may have heard them called 'instant-access accounts' or 'no-notice accounts', but they're all the same thing - a flexible, accessible way to save.

It's very simple; you pay your money in, earn interest, and can withdraw your funds whenever you like.

That's why many people use such accounts for their emergency, rainy-day fund - it means that their money is within reach at all times.

If the boiler breaks or an unexpected bill arrives you can get your hands on the money straight away.

Are there any downsides to an easy-access account?

In the past it's always been advisable to have some money saved in an easy-access savings account, but the waters have been somewhat muddied with the rise of interest-paying current accounts.

Such products offer all the convenience of no-notice saving and, in some cases, have been known to pay more attractive rates of interest.

Did you know...?

  • Some no-notice options may offer a better rate of interest in return for agreed restrictions being placed on the account
  • Many accounts offer a bonus rate for the first year - interest returns will fall sharply after this ends

Remember also that instant-access options aren't necessarily the best way to save larger amounts. As a general rule, the more restrictive a savings deal is, the higher the rate of interest you'll earn.

There's a lot to think about when choosing a savings option and the right one depends on you.

For example, if you're trying to build up a savings habit then a regular saver account might be worth considering.

If you have a lump sum and you want to earn as much interest as possible, then a fixed-rate bond might be more suitable.

Try our savings guides for more information on some of the products and options.

Are there high-rate, easy-access options?

Some easy-access accounts may pay a higher rate than others, but watch out for restrictions.Piggy bank and coins

For example, you might have to agree to only being allowed to make a limited number of withdrawals in a year.

Other options may be online only, meaning you can't manage them in a branch or on the phone.

Because that means your account is less work for the bank or building society, it could pay you a higher rate.

You can find out more about a particular product when using our comparison page.

Are there any catches?

If you've carefully compared easy-access savings accounts then you'll have probably chosen one that's paying a top rate of interest.

However, that won't necessarily last. Many banks and building societies pay a 12-month bonus rate, meaning that you'll be transferred onto a lower rate of interest after the first year.

The drop in rate could be dramatic, leaving your savings earning a paltry amount unless you do something about it.

Your account provider should send you a provider when a bonus rate is about to end, but it's a good idea to make a note yourself of when you opened the account and consider switching around the time of the first anniversary.

That way, you're regularly comparing accounts and can be confident you're earning a top rate.Pile of coins

Easy-access Nisas

New Individual Savings Accounts (Nisas) work in much the same way as normal savings accounts, but you don't pay any tax on the interest you make - read more in our beginners' guide to Nisas.

An easy-access Nisa is one way to use your tax-free allowance for the year.

On 17 November, 2014, Gocompare.com checked 333 Nisas listed on the matrix of independent financial researcher Defaqto and found that 110 allowed notice- and penalty-free withdrawals, although some still had a limited number of withdrawals that could be made.

If you plan to dip into your Nisa through the tax year, make sure it's easy access and check how many withdrawals are permitted without penalty to make sure it's the right option for you.

If this is the only savings you have it may make sense to benefit from the tax-free benefits of a Nisa, but consider whether there are regular savings products and/or current accounts available that offer better rates when adjusted for tax.

If you have an emergency fund and you're looking at a Nisa as a longer-term investment, an easy-access option may not be the right deal. As ever, though, compare the options.

Remember that you can only open one cash Nisa in a given financial year, but you can then transfer it into another Nisa account, perhaps one offering better returns.

How much do you need to save?

If you're using an easy-access savings account to stash your emergency fund, typical advice is to try to build up enough to cover your salary for between three and six months.

As your savings build up, they'll grow faster - even if you're only paying in the same regular amount. Each time the interest earned on your money is paid in it starts earning interest, too
Money Advice Service

If you can't afford to put quite that much aside, just save what you can - any savings are better than none. Think of it as a cushion - the thicker the better!

Some of the top-rate, easy-access accounts require a minimum deposit, sometimes as high as £1,000.

If you dip beneath that amount then you won't earn the advertised rate of interest.

But there can be very good options with a minimum deposit of just £1, so think carefully about how much you plan to keep stashed away.

Then, compare a range of accounts so you can be sure you've chosen the right product and that it's paying the best rate possible.

By Felicity Hannah