Financial wellbeing: Savings accounts are a great way to strengthen your finances and act as a rainy day fund or pension pot
Competitive interest: Grow your savings more quickly by choosing an account with a competitive interest rate
Risk-free: Savings accounts offered by banks in the UK include deposit protection of up to £85,000 per person, per banking group through the Financial Services Compensation Scheme (FSCS)
Millions of Brits are expected to reach the end of cheaper fixed-rate mortgages in 2024, with monthly repayments for an average homeowner to increase by about £240.
The good news is that you can still earn a competitive interest rate and enjoy the freedom to access your savings with a notice account from Raisin UK. Often viewed as the best of both worlds, our top notice account currently pays a competitive rate of 5.40% for a 95 day notice period – perfect if you want to earn a good rate without sacrificing access to your cash. For an even shorter term length, our top 32 day notice account is 5.02% AER.
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A savings account is an account you pay money into and earn interest from. It’s as simple as that. The critical thing to know is which type of savings account is best for you (more on that below).
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.
Saving for a housing deposit is made so much easier when you opt for a high yield savings account that suits you. You could even choose one that has restrictions on withdrawals to help you save, such as a notice savings account. If you’re buying a house with your partner, you might want to look at joint savings accounts so you can both save towards your shared goal. First-time buyers may also wish to consider a Lifetime ISA.
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 available, you’ll be able to find one that works for you. For example, fixed rate bonds can be a good option if you’re saving for an expensive once-in-a-lifetime holiday, while notice savings accounts may be suitable if you’re not sure when you’ll be going away.
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 plan in mind will set up for them will help them in later life. Plus, most children's savings accounts and Junior ISAs pay better interest rates than regular accounts.
It’s called the 'big day' for a reason, and with the average UK wedding costing nearly £20,700 in 2023, you’ll definitely want to take some of the financial stress out of wedding planning by having a savings pot ready. Depending on when you’re getting hitched, a long-term savings account such as a fixed rate bond may be a good option. Even if the big day is only a few months away, you might still benefit from putting your money into a notice savings account.
With some advisers recommending that you save ten times the amount of your annual salary ready for retirement, the earlier you pay into your savings pot, the better. As well as paying into a pension, you could consider growing a lump sum for retirement with fixed rate bonds. If you don’t intend to retire in the immediate future, putting your money into a high yield fixed-rate savings account can be a good way to accrue interest over the long term.
ISAs, or individual savings accounts, are great for those looking to save in a tax efficient way, as they let you save £20,000 without paying any tax on the interest you earn. It’s worth remembering, however, that many people won’t pay tax on their savings thanks to the personal savings allowance. That being said, ISAs can be a good option for those with a large amount of savings, or additional rate taxpayers.
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. How much interest you’ll receive also depends on the annual equivalent rate (AER) and the way the bank calculates interest.
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 protected by the Financial Services Compensation Scheme (FSCS).
Every 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 in the UK. Unless you already have an account with the provider, you’ll probably need to provide some form of ID and proof of address.
If you’re under 18, you can open a children’s savings account or a Junior ISA. Parents or guardians can open a savings pot on their child’s behalf – often with as little as £1 – but any money in the account belongs to the child.
Whether you’re opening a normal savings account or a child savings account, it’s important to do your research on savings plans, as interest rates can vary significantly between providers. There are plenty of comparison sites online or visit the table above to compare top saving accounts from our range of partner banks.
There are lots of different types of savings accounts available, and finding the right one for your needs can feel daunting. In this section, we’ll talk you through some of the most popular savings accounts in the UK, including easy access savings accounts, fixed rate bonds and notice savings accounts.
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. Fixed rate bond terms typically last for between one year and five years, though shorter and longer terms are available.
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. However, they tend to pay lower interest rates than fixed rate bonds and notice savings 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 pot for as long as you like, but you’ll have to give ‘notice’ when you want to withdraw your money. Notice periods are generally between 30 and 95 days, depending on the provider.
Here’s some questions you can ask yourself to help you decide what type of savings account is right for you and your savings plan.
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, a flexible savings pot (for example 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, such as a retirement fund, a high-yield, fixed term savings account may be a better option.
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, so they’re an ideal savings pot to put your emergency savings. However, 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 savings accounts, on the other hand, 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. If you want the freedom to withdraw your cash but don’t need immediate access, a notice account may be a good option.
How much you’re looking to save will affect what type of savings account suits you best. Regular savings accounts in the UK 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 2024/25, the ISA cap is £20,000). FSCS protected savings accounts will cover your money up to £85,000 per person, per banking group (or £170,000 for joint savings accounts), 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 that you are covered by the limit.
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.
UK savings rates vary considerably so it’s important to do your homework to ensure you’re getting the best deal for you. You can compare a range of high-yield saving accounts with competitive interest rates in the table above. All of the accounts available through our partner banks are protected under the Financial Services Compensation Scheme (or European equivalent), so you can rest assured your deposit (up to £85,000 per individual, per institution) will be protected in the event the financial bank fails.
Once you’ve found an account that suits you, simply log in or register for a Raisin UK Account online or via our app, and follow the steps to apply for your chosen account. If you have any questions, our UK-based customer services team will be happy to help.