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I hope that you read my last post and you joined me in making a commitment to increasing your level of saving each month. If you have not had time to read it yet, you can read it here, How Much Should you Save?
In this post, I will give an overview of the different types of savings accounts that are available for most adults in the UK.
Bank Savings Accounts
Perhaps the easiest to set up, these are savings accounts that are usually in the same bank that handles your current account. It is very easy to transfer money from your current account into your savings account each month. The transfer can be achieved very quickly via your bank’s app, assuming that you have downloaded and are using your bank’s app. Unfortunately, this ease of access without any penalties can work against you too. It can be a little too easy to transfer money from your savings account back into your current account, more on that in a future post.
Regular Savings Accounts
If are able to commit to a regular savings account you should be able to secure a higher interest rate than a normal savings account. There are limits to the amounts that you can save and also for how long, but they are definitely worth having if you are able to.
Easy Access Cash ISA
If you open a Easy Access Cash ISA, you will be able to save up to £20,000 tax free each year and still have access to it if you need to. Individual Savings Accounts (ISA) were first introduced in 1999, initially with a limit of £7000. Now the amount you can shield in a tax free ISA is £20,000.
Fixed Rate Cash ISA
The Fixed Rate Cash ISA differs from the Easy Access Cash ISA because savers must commit to not accessing their funds for a fixed term. This term could be one, two or three years. If savers access their funds before the fixed term has finished they are penalised with a loss of interest.
Fixed Rate Savings
If you are comfortable locking away your money for a couple of years, you should consider fixed rate savings because you will secure a higher interest rate
Notice Savings Accounts
As the same suggests, notice savings accounts require the account holder to give notice before they withdraw money. This notice period could be 30, 60 or 90 days in advance.
It used to be that you had to consider the tax implications of savings accounts. However, the introduction of the Personal Savings Allowance in 2016 has meant that most people now no longer pay tax on savings interest.
What type of savings account do you use? Let me know in the comments section below.
If you have liked this post you will also like the following posts:
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My aim with each blog post is to help you move to a better financial future. I believe that financial education is largely absent from the national curriculum and I intend to share anything helpful that I have learned along the way. I am by no means a financial expert. None of the information on this website constitutes financial advice and is provided as general information only. This is my personal finance blog; my marketing blog is over here and I have been blogging there since 2010.
I hope you have found this information useful. Thank you for reading.
Best regards,
Mike
