Types of savings accounts
There are four main types of savings account in the UK, each with their own benefits. If you’re struggling to know how to choose a savings account, read on to learn about each one and decide which is best for you.
What are the different types of savings accounts?
In the UK there are four main savings accounts options. Depending on which you choose, you may benefit from better interest rates, easier access to your money, or a guaranteed rate of return.
Easy access savings accounts
As the name suggests, easy access savings accounts give you freedom to access your money as and when you need to. Different banks may have their own rules about withdrawal limits or notice periods, but easy access savings accounts are the most flexible type of savings account. They could be best suited to people who want to save their money but also be able to take it out when they need it.
Fixed rate savings accounts
With a fixed rate savings account, you can save money for a set amount of time with a fixed interest rate that doesn’t change. The amount of time this is over is usually called the term. Any money saved in a fixed rate savings account is locked in, meaning you generally can’t withdraw it until the term ends.
Fixed rate savers could be best for people who want to guarantee their interest rate for the duration of the term, but who won’t need to access that money during that time.
High interest savings accounts
High interest savings accounts typically pay higher interest than the national average interest rate. It’s a risk-free way of getting higher returns on your savings, unlike stock market investments where your money is at risk. However, with high interest savings accounts you may be charged a fee to withdraw money before the end of the agreed term.
ISAs
Individual Savings Accounts, or ISAs, allow you to save money tax-free. There are four different types of ISA. There is also an annual limit on the amount of money you can save in ISAs. Find out more with our guide to ISAs.
Learn more about the savings accounts Sainsbury’s Bank offers.
How to find the best savings account for you?
Choosing which savings account is right for you will depend on a range of factors. You should consider the following:
- Whether you want to be able to access your money regularly
- How much you’re likely to save
- Whether you want to spread it out across different types of accounts
- The interest rate and how much interest you’re likely to make
- Whether you’re saving for a short-term purchase or a long-term investment
What’s the difference between an ISA and a regular savings account?
The main difference between ISAs and savings accounts is that all the interest you earn in an ISA is tax free. There is also an annual limit on the amount of money you can save in an ISA, whereas there is no set annual limit on saving into a savings account. You can learn more about the differences between the two in our guide to ISAs vs savings accounts.