Everyone wants the same thing from their savings: to get the highest interest rate they possibly can.
But there’s not a one-size fits all high interest savings account. You’ll need to find an account that fits with how much money you have to save, how often you add to your savings and when you want to withdraw them.
Savings rates are given as an annual equivalent rate (AER). When you compare savings you can choose to see them with the highest AER first, which will tell you the accounts with the highest interest.
But you can filter your results as well, so you’ll only see easy access accounts, for example, if you don’t want to lock your money away for a year or more.
Interest is how much your bank will pay you for saving with them, given as a percentage.
Most savings accounts pay compound interest, which means that the interest your money earns will also earn interest. That lets your money grow faster.
There’s a savings account to suit every type of saver, no matter how little or how much you manage to put away each week or month.
Keeping your money in savings will mean it’s safe and potentially growing with the interest paid. But you need to make sure you put it in the right sort of account for how you want to save.
Before you open a savings account think about:
You may not want to open a savings account if you:
The main differences between savings accounts are how easy it is to withdraw money from the account and how much interest you'll earn.
There are a few core types of savings accounts:
If you're looking to get the most interest on your savings, but on a short-term basis, you'll probably want to look at easy access accounts. You can usually withdraw money any time, though sometimes there's a limit on how many withdrawals you can make in a year.
If you don't need easy access to your cash, or you're saving for something a little further down the line, then a fixed rate or notice account might work better for your money.
These generally have higher interest rates but will have limits on withdrawals. You might not be able to withdraw any money to start with. And if you do want to, you usually need to give notice - usually between 30 and 120 days.
Generally, you'll get better interest rates on accounts it's harder to take money out of - where there are limits on withdrawals, for example.
The rates are sometimes higher than easy access savings, but you need to tell the bank in advance when you want to withdraw from your savings. For example, you might need to give the bank 90 days’ notice before you can access your money.
Regular savings accounts can have some of the highest interest rates available. But you can only pay in a relatively small, regular monthly deposit and you can’t usually open them with a lump sum, or pay one in later.
Everyone has a personal savings allowance that lets them earn a certain amount of interest before they pay tax. But if your savings interest exceeds the personal allowance, an ISA is a tax-free ‘wrapper’ for your savings that gives you a higher tax-free allowance on savings interest.
Children can have their own savings accounts and junior ISAS give under 18s a £9,000 tax-free allowance on savings interest. Make sure you know how the child will have access to the funds in the future.
Sharia savings have an expected profit rate instead of a guaranteed interest rate. They’re run in compliance with Sharia law.
You’ll need to be aged 16 or over and be a UK resident for tax purposes
You may be asked for proof of ID, address and proof of bank account
Choose from easy access, fixed-rate or more
Some accounts can be opened with as little as £1, while others ask for a larger opening deposit
Some savings accounts have minimum amounts you need to put into them each month
It’s a good idea to get into the savings habit, but how much you can put away in a savings account, and how often, is your choice.
You could start by seeing how much you have left at the end of the month after expenses and bills and putting it in the highest interest easy access account you can find. That way you won’t be tempted to spend it, but you can withdraw it easily if you really need it.
If you have more to save or a lump-sum, you might be happy to lock it away in a fixed-term account to get a higher interest rate.
You should aim to keep your savings in an account with an interest rate that’s higher than the rate of inflation. If the rate paid on your savings is lower than that, you could be losing money in real terms because your savings will buy less in the future than they would today.
An ISA is a savings account - ISA stands for Individual Savings Account. You don’t pay any tax on the interest you earn in an ISA, although there’s an annual limit on how much you can save. But you do have a personal allowance for savings interest in an ordinary savings account too.
There's no limit to the number of savings accounts you can have, but there are restrictions for the number of open cash ISAs you can save into during any one tax year.
If you’re a basic-rate taxpayer, your personal savings allowance (PSA) means you can earn £1,000/year in savings interest before paying any tax on it. The allowance is £500 if you’re a higher-rate taxpayer.
Savings accounts aren’t a credit product and they won’t affect your credit score or your ability to borrow.
Only credit products like current accounts, credit cards and loans appear on your credit record.
AER stands for 'annual equivalent rate' and shows the percentage interest you’d get if you put your money in an account and left it there for a year. It lets you compare the interest rate of one account to another.
Gross is the interest rate without tax deducted.
You get £85,000-worth of Financial Services Compensation Scheme (FSCS) protection per institution you save with, as long as they’re UK regulated.
So, if you’ve got more than £85,000 in savings you might want to split your money between several financial institutions to be on the safe side.
Easy access accounts give you the quickest access to your money without penalties. Even if your money’s locked away in fixed-term savings, you can usually access your money but there’ll probably be penalties like losing some interest.
There are savings accounts that can be opened in the name of a business. They may have more favourable rates than leaving your company’s money in a business current account.
Your account can be in sole or joint names and you can have a maximum of two joint account holders.
Some providers will ask you to open your account in a sole name and add a joint holder once it’s opened.
Both savers will be able to pay into and withdraw from the joint savings account.