What are the best savings accounts? – Forbes UK Advisor
There are several types of savings accounts available and which one is right for you will depend on whether you need instant access to your money and how much money you need to set aside.
Notice savings accounts:
Notice accounts don’t give you instant access to your money – you have to let the bank or building society know in advance when you want to withdraw money.
Notice periods are generally 30, 60 or 90 days. Interest rates may be higher on notice accounts than on easy access accounts, but you cannot access your money quickly.
Fixed rate accounts:
With a fixed rate savings account (or “fixed rate bond”), the interest rate is fixed for a set period of time. It can range from six months to seven years. However, fixed rates of one, two, three or five years are the most common.
Interest rates are higher on fixed rate accounts than on easy access or notice accounts, but the downside is that you have to commit to leaving your money in the account for the duration of the fix. For example, with a five-year solution, you won’t be able to get your money for five years.
Every adult in the UK can save up to £20,000 in an ISA each year and pay no tax on the returns generated.
In the past, this meant that a cash ISA was the perfect place to start saving.
But the introduction of the Personal Savings Allowance (PSA), which allows you to earn a fixed amount of interest on your savings without paying tax on that interest, has dampened the appeal of cash ISAs.
However, ISAs can still be a tax-efficient option for people with high savings levels. Cash ISAs can be easy to access, notice or fixed.
Regular savings accounts require savers to deposit money each month up to a preset limit, normally £250 or £300.
The interest rate offered can be fixed or variable and is normally higher than the rate paid on easy access accounts.
These accounts typically last for one year with restrictions on when you can withdraw your money.