Savings accounts

Interest rates up to 2.00% AER at Raisin UK

Safe: All of our banks are FSCS protected (or the European equivalent), with your money secure at every stage
Competitive: Grow your savings quicker with better rates than you’ll usually find on the high street*
Straightforward: No fees, endless logins and paper application forms. Just a free, easy-to-use savings service

Claim £50 for opening your first savings account (terms apply) ›
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🟢 1 Year fixed rate bonds up to 1.30% AER

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With many different types of savings accounts available, all with different terms, interest rates, and benefits, it can be difficult to know what type of savings account will help you maximise your money. On this page, you’ll find out more about the features and benefits of different types of savings accounts, how to compare savings accounts and how tax on savings works, giving you the information you need to decide which savings account is right for you.

The rundown
  • Savings accounts are a great way to strengthen your finances and act as a rainy day fund or pension pot
  • Grow your savings more quickly by choosing an account with a competitive interest rate
  • savings accounts offered by banks based in the UK include deposit protection of up to £85,000 per person, per banking group through the Financial Services Compensation Scheme (FSCS)

Top types of savings accounts at a glance

Fixed rate bonds

You’re likely to earn the most interest with this type of savings account. However, you’re agreeing to ‘lock’ the money away until the end of a set term, so you won’t be able to withdraw any money until then.

Easy access savings

This is one of the most flexible types of savings accounts. You can withdraw money whenever you want, whilst still keeping the easy access account open.

Notice accounts

You’re likely to earn a competitive rate of interest with this type of savings account. You can keep the money in the savings account for as long as you like, but you’ll have to give ‘notice’ when you want to withdraw your money.

Could a fixed rate bond be right for me? 

As you’ll be locking your money away for a set term, a fixed rate bond could be ideal if you have a long term savings goal and you know you definitely won’t need access to the money during this time. It could also be a good option if you’re looking for the most competitive rate of return on your money.

Could an easy access savings account be right for me?

An easy access savings account could be ideal if you’re looking for flexibility, and you want the freedom to make withdrawals and top up your savings as and when it suits you. It could be a good option if you have a short term savings goal, or you just want to put money away regularly whilst still earning a high street-beating rate of  interest.

Could a notice account be right for me?

A notice account could be ideal if you’re looking to combine an element of flexibility with a competitive rate. It could be a good option for a medium term savings goal, or if you want the peace of mind that you can always access your money within a shorter period of time than a fixed rate bond.

How to decide which is the right savings account for you

The best savings account for you will depend on how much money you have to deposit, and whether you have a lump sum to put away, or you want to save a smaller amount regularly, instead. It also depends on how long you’re prepared to leave a lump sum untouched for and how often you want your interest to be paid.

You can also choose to split your money by opening more than one type of savings account to get a mix of the benefits they provide.

How to choose
the right savings account for you

Here’s some questions you can ask yourself to help you decide what type of savings account is right for you and your savings goals.

What are you saving for?

Deciding what your savings goals are can help you decide which savings account would suit you best. For example, if you’re saving for something specific, such as a new car or a trip abroad, an easy access account may be ideal as you’ll be able to withdraw your cash as and when you need to without a penalty, as well as being able to top up your balance whenever you want. For long term savings, a fixed term savings account may be a better option.

Do you need access to the money immediately?

Savings accounts have different rules as to when – and how often – you can withdraw your money. Easy access accounts usually allow you to withdraw your money whenever you like without incurring a penalty – but they do come with lower interest rates than fixed-rate savings accounts, and the interest rate can go up and down at any point. Fixed rate accounts require you to lock your money away for a fixed period, with no access to your money within this time – but in return you’re likely to receive a higher interest rate.

How much would you like to save?

How much you’re looking to save will affect what type of savings account suits you best. Regular savings accounts require you to deposit a set amount of money every month. If you don’t make the minimum payment into your account, your account may be closed or you may be given a lower interest rate. ISAs have a cap on the amount you can save each year (for the year 2020/2021, the ISA cap is £20,000). FSCS protected savings accounts will cover your money up to £85,000 per person, per banking group, so if you have more than this amount to deposit, it’s advisable to spread this money over more than one savings account to ensure you’re covered by the limit.

What features are most important to you?

Savings accounts come with different features which may suit what you’re looking for. If you’re looking to get into the saving habit, a regular savings account requires you to deposit a set amount on a monthly basis. They also come with stricter rules than other savings accounts, like limited withdrawals across a period of time. If you want to be sure of how much interest you’ll earn, a fixed rate savings account could be a good option over a variable savings account. Other features may also be important to you, such as having a Sharia-compliant savings account, or banking with a ‘Green’ bank or building society.

Read on to understand why a savings account may be beneficial for you, and to help you choose the best savings account for your savings needs.

What is a savings account?

What is a savings account?

A savings account is an account you pay money into and earn interest from. It’s as simple as that, although there are different types of savings accounts to consider when choosing one that suits you (more on that below).

Our co-founder Kevin Mountford has the following to say about savings, interest rates and how the financial climate affects your money.

“Our finances play a significant role in our day-to-day lives, influencing our wellbeing and how we plan for our future. Whether you’re saving for a house, sending your children to university, building your retirement fund or you want to grow your financial safety net in case of the unexpected, growing your savings pot helps to make a lot of things possible.”

We know that money matters, and through analysing search volume data, we’ve found the most frequently asked questions about savings accounts, and given Kevin the opportunity to share his expertise to answer them:

Kevin Mountford - Raisin UK Co-FounderKevin Mountford - Raisin UK Co-FounderKevin Mountford - Raisin UK Co-Founder

October savings accounts update: what’s new?

With personal pension ages on the rise again in the UK and the energy crisis causing a splash, now more than ever it seems imperative to get a solid financial set-up for your future with minimal risk. 

At the moment, personal pensions can be accessed from age 55, but that is set to increase to the age of 57 from 2028. Contributing to your nest egg now for later in life is going to help provide stability and a sign of relief when other costs are rising and rule changes for pensions come into force. 

If you’re plumbing the line between investment choices right now, the energy crisis is making the stock market nervous and it may not be a great moment to go out on a limb in terms of investment risks. A savings account might be a better option for keeping your cash safe and stable until the market settles.

With Raisin UK, you can grow your rates quicker, stay FSCS protected, and enjoy a straightforward, no-fuss setup that provides a safety net no matter what the future holds. Start saving and let the pennies today take care of the pounds tomorrow. 

Want to stay up to date with the latest offers and news on savings and easy access accounts each month?

What are savings accounts for?

A savings account is not only a safe place to stow your money; it also helps you grow your finances. Your money will grow based on the account’s interest rate and how much you deposit. 

As for what you save for, that can be absolutely anything. You might be thinking about saving for a house deposit, a new car, your retirement or even a once-in-a-lifetime holiday.

 

Saving for a house

Saving for a deposit on a new house is made easier when you opt for a savings account that suits you. You could even choose one that has restrictions on withdrawals to help you save, such as a notice account.

Saving for holiday

Whether you’re planning the trip of a lifetime or want to take the little ones somewhere special, having a savings account will help you stack up your spare cash. With lots of different types of savings accounts available, you’ll be able to find one that works for you.

Saving for retirement

With some advisers recommending that you save 10 times the amount of your annual salary ready for retirement, the earlier you put into your pension pot, the better. You could consider growing a lump sum for retirement with a fixed rate bond.

Saving for children and grandchildren

Making the decision to have children is a huge step, and definitely one that you want to be financially ready for. Whether it’s for your children or grandchildren, having a savings account set up for them will help them in later life.

Saving for your wedding

It’s called the big day for a reason, and with the average UK wedding costing around £30,000 in 2021, you’ll definitely want to take some financial stress out of wedding planning by having a pot ready.

Tax-savvy savings

ISAs, or individual savings accounts, are great for those looking to save in a tax-efficient way, as they allow you to save £20,000 per year (2020/21) without paying tax on the interest you earn.

How do savings accounts work?

A savings account works by you opening and paying into an account. In return for choosing to bank with your provider, they will pay you interest based on how much you have in your account. 

The bank will then use your money to give loans to other people, charging them interest. Essentially, a bank takes money from one person and rewards them with interest in the form of a savings account, and lends money to others and charges them interest in the form of a loan. Despite the bank using your money to provide loans, it is always available to you and is protected by the Financial Services Compensation Scheme (FSCS), as long as you deposit less than £85,000 per person, per banking group.

Who can open a savings account?

Each savings account will have its own terms and conditions regarding who can open an account and with what amount, but you will usually have to be aged 18 or over to open a savings account on your own. 

If you’re under 18, there are some accounts available to you, including Junior ISAs and children’s savings accounts.

What are the pros and cons of savings accounts?

Savings Account Advantages
Savings Account Disadvantages
Many savings accounts offer easy access and plenty of availability. They are easy to open and you can withdraw and deposit money anytime (within certain limits) by using online transfers and cashpoints. They often also have low deposit requirements. Low interest rates might mean that your money isn’t growing at the rate you would like it to.
You can grow your money with savings accounts by choosing one that offers a competitive rate of interest. Inflation could mean that your money ends up having less buying power if interest rates remain low.
A savings account can come with perks, such as insurance, recreational benefits and bonuses. Some savings accounts have a minimum balance requirement, such as £500 a month, meaning you will need to deposit this amount every 30 days.
Most savings accounts don’t lock you in for any period of time, meaning you can change whenever you like. While easy access can be seen as a major plus, it also means that saving could be difficult if you often give in to temptation, and these types of accounts typically offer less competitive interest rates.
Savings accounts provide a liquid asset that you won’t have to sell or go through lengthy procedures to have access to. Some savings accounts will have restrictions in terms of withdrawal limits and access. Be sure to check the terms and conditions before you commit.
Up to £85,000 of your cash is protected in the unlikely event that your institution fails.

How to calculate interest on a savings account

The most simple way to calculate interest on a savings account is to multiply your account balance by the interest rate by the time period you plan to have the money in the account. 

The equation looks like this: 

D x R x T = interest earned

D = Initial deposit

R = Rate

T = Time in the account

How is interest paid on savings accounts?

How interest is paid depends on your savings account, so it’s best to check the details to make sure you’re getting an account that’s right for you. It’s common to receive interest payments once a year, either on a predetermined date or on your account opening anniversary. Some accounts pay out interest monthly, and some may pay quarterly. In the case of fixed rate bonds, you may only receive an interest payment when your account matures, which could be up to five years.

You’ll usually receive interest payments into a bank account you nominate, or the interest you earn can go straight back into your savings account.

Are savings account interest rates worth it?

Although saving account rates aren’t as high as they have been in recent memory, savings accounts still offer one of the most reliable and safest ways to grow your money.

The Bank of England base rate is currently low, at just 0.1% (as of 19th March 2020). That means it can be difficult to find high-interest savings accounts that make your money work hard for you. Currently, some of the best savings interest rates in the UK are lump sum savings accounts that lock your money away to earn interest for a set period of time. You can view the top savings account rates in the table above. The most competitive lump sum account in our marketplace has an interest rate of 2.00% AER.

When will interest rates go up or be cut?

No one can say with certainty when interest rates will change, as this decision ultimately lies with the banks that offer them. The Bank of England (BOE) can influence change by changing the base rate, subsequently influencing financial institutions’ rates.

The BOE made emergency cuts to the base rate in an attempt to reduce the impact of the coronavirus outbreak on the economy, cutting the base rate from 0.75% to 0.25% on 11th March 2020, and from 0.25% to 0.10% on 19th March 2020 (the lowest base rate on record).

These emergency interest rate cuts may be a temporary response to the current financial crisis, but we cannot say for sure when interest rates will rise or fall. Interest rates fell in the same way just after the Brexit referendum and remained at previously historic lows for just 15 months before the BOE began raising the base rate again.

As you can see from the chart below, the BOE base rate can rise and fall quite dramatically. The surge in the late 1970s and early 1980s was due to fighting high inflation caused by the rising costs of oil and wages.

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The base rate has been decreasing since the 2008 financial crisis in response to the recession, and more recently, the economic impact of the coronavirus pandemic, as shown below:

bankofenglandinterestratebankofenglandinterestratebankofenglandinterestrate

What are the most common types of savings accounts?

There are several different types of savings accounts, all offering different benefits. These are the most common types of savings accounts:

Fixed rate bonds Fixed rate bonds require you to lock away your money for a set period of time. Interest rates are typically competitive, especially over the longer term.
Easy access savings accounts The most straightforward savings account type, an easy access account is very flexible and allows you to deposit and withdraw money at any time.
Notice accounts With a notice account, you can usually make deposits or withdrawals at any time, but you will need to give notice (usually around 60 days) to withdraw your savings.
ISAs An ISA, or Individual Savings Account, is a tax-free savings or investment account. You can save up to a maximum of £20,000 per tax year (currently 6th April 2020 to 5th April 2021) before paying tax on your savings, and you can choose from a few different types of ISA, including cash ISAs and stocks and shares ISAs.
Help to Save Help to Save is a government-backed type of savings account designed to help low-income earners save.

Another common savings account type is a regular saver account, that requires you to save a set amount each month, which is ideal for those who are starting with a small amount rather than a lump sum. Some people also use their current accounts to save money, although this type of account rarely offers good rates of interest.

According to a 2019 survey, these are the most common ways to save in the UK:

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What are fixed rate bonds?

Fixed rate bonds or fixed rate savings accounts offer guaranteed returns on your savings over a set term, typically between six months and five years. Interest rates on fixed rate bonds are often better than standard or easy access savings accounts and are usually more competitive the longer your term is. If you have a lump sum of money that you want to grow and can afford to lock away, fixed rate savings accounts might be right for you. 

What are easy access savings accounts?

As the name suggests, easy access accounts have minimal restrictions and allow you to top-up or withdraw your money easily and at your convenience. Typically, easy access accounts, also known as instant access accounts, offer variable interest rates, meaning that the rate could both increase and decrease.

What are notice accounts?

Notice accounts could be right for you if you want to grow a lump sum of money that you might need access to at a future date of your choosing. They allow you to make a withdrawal on a date you choose by giving your savings account provider notice, typically between 30 and 90 days, that you want to withdraw your money.

Why compare savings accounts?

It’s important to compare savings accounts so you find the account that suits your needs and pays a competitive rate of interest. In the wake of the coronavirus pandemic, there’s never been a more important time to get the best available rate. For example, many savings accounts are currently offering as little as 0.1%, but when you take a look around and compare savings accounts, you can usually find ones that offer much higher rates.

What should you consider when you compare savings accounts?

There are a few important things to consider when comparing savings accounts, which are as follows:

  • Will this account allow me to access my money when I want or need to?
  • Will the interest rate on this account help me reach my savings goal? 
  • Are there any restrictions that I need to be aware of? 
  • Is this bank covered by the FSCS? 
  • Are the interest payments made in a way that works for me?

Should you compare savings account interest rates?

It’s important to do a savings account comparison to make sure you get the right type of account and the right interest rate for you. You can compare savings account rates on fixed rate bonds and notice accounts in the table above.

How to decide which is the best savings account for you

The best savings account for you will depend on how much you have to deposit, whether you have a lump sum or want to save a smaller amount each month, how long you’re prepared to leave a lump sum untouched for and how you want your interest to be paid.

You can also choose to split your money by opening more than one type of savings account to get a mix of the benefits they provide.

How many savings accounts can I have?

You can open an unlimited number of savings accounts, and it’s something worth considering. For example, you could open a fixed rate bond for long-term savings and have an emergency pot in an easy access account that you can dip into as and when you need to. You might also consider a notice account if you’re saving for a big holiday, a wedding or a house deposit. FSCS protected savings accounts will cover your money up to £85,000 per person, per banking group, so if you have more than this amount to deposit, it’s advisable to spread this money over more than one savings account to ensure you’re covered by the limit. 

Do I pay tax on money in a savings account?

Less than 5% of UK savers will pay tax on the savings they earn. Basic rate taxpayers can earn up to £1,000 per year tax-free. For higher rate (40%) taxpayers, it’s £500.

Is my money protected in a savings account?

With regulated UK banks, your money is protected up to £85,000, or £170,000 for joint accounts, by the Financial Services Compensation Scheme (FSCS) should your savings provider collapse. This amount is per banking group, so if you have over £85,000, you could open savings accounts with different providers to ensure it’s all protected.

All of the savings accounts in our UK marketplace include deposit protection, with accounts from UK banks providing FSCS protection. We only allow you to open savings accounts with up to £85,000, so you can be confident that your savings deposits are protected.

How to set up a savings account

While it might seem like a daunting process, setting up a savings account is really simple, quick and easy. It can be broken down into four steps:

Step 1: Do your research & compare savings accounts to know what you want
By knowing exactly what your savings goals and requirements are, you can make an informed decision when choosing the right account for you.
Step 2: Know where you can open an account
When you’ve chosen what kind of account you’d like to open, you’ll need to know exactly how to go about opening the account for yourself. The good news is that this is easily done either:
  • In branch
  • Over the phone
  • By post
  • Online
  • Via a banking app
Not all of these options are always available, it’s best to check with your chosen provider.
Step 3: Have the information you need ready
All providers require the same details when you open an account:
  • Full name
  • Date of birth
  • Full address
  • A contact telephone number
  • Proof of ID (such as a passport or driving license)
  • Proof of address (such as a utility bill)
When it comes to the proof of address or ID, the bank will need to see the originals, not copies.
Step 4: Get saving!
You will then be given access to a savings account ready to deposit your first amount, subject to whatever terms you have agreed to. It’s as easy as that!

Opening a savings account through the Raisin UK marketplace is just as easy, and our entirely online platform allows you to compare accounts from many different providers. For a more in-depth guide to opening an account with Raisin UK, explore our quick start guide.

Why a savings account from our marketplace might be right for you:

  • All of the savings accounts on our marketplace are free to open
  • Your savings deposits are protected
  • You’ll earn competitive interest rates
  • You can choose from a range of savings accounts
  • You can easily manage your savings online

Quickly and easily open savings accounts with competitive interest rates from a range of UK banks by registering for a Raisin UK Account. It’s free to open a Raisin UK Account and savings accounts through our marketplace, and once you’ve been approved, you just need to make your deposit and watch your savings grow.

*Based on a comparison of Raisin UK partner bank rates and high street bank rates
between 31 Dec 2019 – 31 Dec 2020

Savings Accounts FAQs

Depending on the type of savings account you choose, there are plenty that let you withdraw cash whenever you like. 

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You can open a savings account in a branch, over the phone, by post, online or via a banking app.

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You can close a savings account in a branch, over the phone, by post, online or via a banking app.

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COVID-19 has impacted lives across the world, with the pandemic affecting people’s jobs, health and personal finances. Amid the chaos, people may be wondering if their money is safe in the bank, and the answer is “yes”.

The Financial Services Compensation Scheme (FSCS) covers all UK-regulated current or savings accounts and cash ISAs in banks, building societies and credit unions.

The FSCS is an independent FCA regulated fund set up by the UK-government. The scheme promises that in the event of a bank collapsing, no matter your age or where you currently live, you will get some of your money back, providing that the bank is registered and regulated in the UK.

The amount you can claim through this compensation scheme is limited. The FSCS currently states that if your bank fails, you can claim up to £85,000 per person, per financial institution.

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The short answer is no. Because consumer credit reports don’t include savings accounts and no borrowing or debt is involved, savings accounts have no impact on your credit rating. Applying for and opening a savings account will not show up on your credit report, and neither will any deposits or withdrawals you make.

A credit rating or credit score is essentially a numerical expression based on your credit history which can determine your creditworthiness before a financial institution allows you to take on certain financial responsibilities.

Financial institutions develop your credit rating from consumer credit reports, considering any credit cards, loans (including Hire Purchase Agreements) and unpaid accounts or bankruptcy filings in your name.

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The amount of money you should have in savings will depend on what it is you’re saving for. The recommended amount for common savings goals can be seen below: 

Retirement  – Advisors suggest ten times your annual salary. For example, if you earn £28,000 per year, you’d be encouraged to save £280,000 for retirement. 

Wedding – The average UK wedding costs £30,000, which gives you a figure to work from depending on your budget and what you want from your special day.

House deposit – The larger the house deposit you put down, the less you’ll pay back in terms of your mortgage. Having a 15% deposit or more could help you secure the best bank rates.

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The savings accounts that offer the highest rates of interest will differ and fluctuate in line with the Bank of England base rate, which is why it is well worth shopping around for your savings account. You may also want to consider a savings account with more restrictions, as these types of accounts typically offer higher interest rates as a reward, such as fixed rate bonds. You could also consider investing, although you do need to be aware of the increased risks involved.

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The best ways to save for your children or grandchildren are to open a Junior ISA, which will allow you to save up to £9,000 a year tax-free for them. Alternatively, you could choose to invest in premium bonds, which you can sign over to the child when they turn 16, or you could open a children’s savings account.

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As inflation rises, things get more expensive. This means your money has less buying power than it did before. 

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Yes, savings can affect your benefits if you have over a certain amount saved. 

  • If you have less than £6,000 in savings, you will be eligible for your full benefit amount
  • If you have more than £6,000 saved, you will lose some of your benefit payment

If you have more than £16,000 in savings, you are not eligible for any means-tested benefits

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