Last updated: 23/07/2020 | Estimated Reading Time: 3 minutes
A guide to savings accounts and ISAs
This guide will explain various things that you need to know about the different types of savings accounts that are out there for you to choose from. It will also examine the main things that you should consider before you decide upon which savings account is right for you.
In This Guide:
- Sthe different types of savings account
- Easy-access accounts
- Term savings account
- Notice savings account
- Standard savings accounts
Sthe different types of savings account
There are a huge amount of different savings account options out there for you to choose from. Finding the best savings account is all about knowing what exactly it is you want from one. You need to decide whether or not you need to access your money quickly and easily or if you are happy to lock it away for a while.
If you feel like you want to be able to access your money whenever you need to, then it is probably a good idea for you to consider opening what is known as an easy access savings account. These accounts allow you to withdraw your money at any moment without being subject to a penalty charge or having to give notice. If you do decide to go down this route, it is probably a good idea to have a look at accounts that are run online as these often offer some of the most competitive interest rates due to their low.
Term savings account
If you are someone who is willing to lock their money away for a year or more, then you should look into taking out what is known as a term savings account. These accounts ask you to put your money in for a set period of time without withdrawing from them. Some accounts will allow you to make withdrawals if you really need to but in most cases you will lose interests by doing so. The benefit of committing your money for a longer term is that you get a fixed amount of interest over the term. These account will generally have the most competitive rates of interest.
Notice savings account
If you're somebody who would like to be able to access their money if they need to but would like to have a disincentive in place in order to avoid it, then you may want to look into opening a notice savings account. Notice savings accounts require the account holder to give the bank or building society around one to three months notice before they can withdraw their money. One thing to remember with these accounts is that banks may charge you a penalty if you need to withdraw the money earlier than you initially thought.
Standard savings accounts
Normal or regular savings accounts often ask you to put away a certain amount of money each month. These accounts normally come with a minimum and maximum limit on how much you can deposit each time. This means that you can't put away a large lump sum if you suddenly decided that you wanted to. However these accounts do normally come with a fairly competitive level of interest.
These accounts are fairly unique in the fact that they are protected from being taxed. Most accounts will be subject to taxation if they earn you any interest but with individual savings accounts (ISAs) you are exempt from this. The limit that you are allowed to deposit annually into ISAs has recently been raised to around £15,000 - increasing the benefit of it being in a tax wrapper.