Easy-access savings accounts

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. That said, current accounts tend to have limits on how much of your balance they will pay that high rate of interest on, say the first £3,000, making them less appropriate for bigger balances. These accounts may also have a time limit over how long the rate will be paid ‒ you may only get that higher rate through your current account for a year.

While easy access accounts are useful for money you need in an emergency, they aren't necessarily the best way to save larger amounts. As a general rule, if you lock your money away in an account that doesn’t allow access for a couple of years then you’ll get a better rate of interest.

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 and think about the long-term benefits that can accrue with compound interest.

Bonus-rate periods

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 savings providers 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 notice 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.

How much should I save in instant access?

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.

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.