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Savings Accounts

A savings account is a simple and safe way to store away some of your money and earn interest while keeping it accessible. Savings accounts are deposit-based, meaning that you can put money in whenever you want, except for fixed term savings, which usually only allows money to be invested at the beginning of the account’s term. Often, people will save a percentage of their salary into their savings account each time they are paid. By continually depositing small amounts regularly you can save money without it interfering with your daily life and when that rainy day comes along, you’ll be ready. Other products similar to savings accounts include ISAs. A cash ISA is the same as a savings account, only the interest earned on it is tax-free. As such, if you are thinking about putting some money away, it is worth considering an ISA if it is an option for you. For more on ISAs, see our guide on cash ISAs A stocks and shares ISA, as with any other form of investment, will come with the chance of your savings increasing in value by a lot more than standard interest rates would allow, but with this comes the potential risk that you may of lose some of your initial investment.

There are various regulations in place in order to protect customers from bank misconduct, ensuring that there are no hidden fees or clauses and that all banks and building societies provide an honest and fair service. Until March 2013, all of this was regulated by the Financial Conduct Authority (FCA) and much of banks’ conduct was controlled by FCA Payment Services Regulations 2009. From April 2013 the FCA was split into two organisations, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).steengthening consumer protection. The Financial Services Compensation Scheme (FSCS) can pay compensation if a bank, building society or credit union is unable to pay claims against it. The deposit protection limit from 30 January 2017 is £85,000 (though firms have until 30 June 2017 to update written customer information about this limit).

The reasons to start saving are clear as day. You never know when you might need that extra bit of cash, and if you do, the reasons for having money stored away in a savings account speak for themselves. Having money in savings helps reduce the need to borrow any or to take out a credit card, helping both your financial stability and your credit profile. By avoiding future debt you are avoiding one of the most common causes of worry and stress in this day and age, and freeing yourself up generally. Having the right savings account can be a blessing in times of need, but it is important not to save more than you can afford to. That is, work out how much you can afford to put into savings each month after having paid all of your household bills and general living expenses. It is also important to take tax into account; with an account like a Cash ISA, no tax is paid on the interest earned, but you can only invest a limited amount in a Cash ISA each year..