Lump Sum Savings Account

Do you have a lump sum you’d like to invest?

Do you have a lump sum you’d like to invest?

Perhaps you’ve received an inheritance, sold your house, have a tax-free sum from your pension or have a fixed rate bond coming to the end of its term. If you can afford to lock your money in for a set period of time, you’re more likely to earn a competitive interest rate by opening a lump sum savings account than if you choose an easy access savings account.

All savings accounts at Raisin UK are deposit protected and free to open online. Lump sum savings accounts include the following benefits:

  • Competitive interest rates
  • Choice of fixed or variable and open or fixed terms
  • Quick and easy to set up and manage
  • Open with a single deposit  
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The rundown
  • Depositing a lump sum into a savings account can help you grow your money quickly
  • Savings accounts offered by UK regulated banks at Raisin UK are protected by the Financial Services Compensation Scheme (FSCS)
  • Most savings accounts are free to open with small minimum deposit amounts

What are lump sum savings accounts?

Lump sum savings accounts provide competitive rates of interest over a term of your choosing and, as the name implies, you can only open them with a lump sum deposit, rather than an initial deposit that you can top-up at a later date. Two popular types of lump sum savings accounts are fixed rate bonds, which offer a fixed interest rate, and notice accounts, which typically offer a variable interest rate.

In 2020, the amount of savings stashed away across all UK households hit a record high, with disposable income rising from 9.6% to 29.1%. With the coronavirus lockdown meaning less spending, you could find yourself with a lump sum that might provide you with the perfect opportunity to grow your savings.

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How do lump sum savings accounts work?

With a lump sum savings account, you pay in a one-off deposit and simply let it accumulate interest. The amount you deposit is typically larger than the amounts you’d deposit into a regular savings account on a monthly basis, for example.

Lump sum savings accounts tend to work well if you have:

  • Received an inheritance
  • Won some money
  • Received a redundancy payout
  • Released some equity from your property

How is interest on a lump sum savings account calculated?

Interest can be calculated on a monthly, quarterly or annual basis. The interest you’ll earn from your lump sum savings will vary depending on the following factors:

  • The value of your lump sum deposit
  • What the interest rate on the account is 
  • Whether the rate is fixed or variable

What are the benefits of a lump sum savings account?

A lump sum savings account could be beneficial for you if:

  • You want the reassurance that your savings are safe
  • You won’t need to withdraw your deposit before your term matures
  • You’re looking for a competitive interest rate over the short or medium-term
  • You want to avoid the temptation of spending your savings

Can your money grow in a lump sum account?

In short, yes, you can absolutely grow your savings if you open a lump sum savings account. This growth comes from the interest you earn, also known as the Annual Equivalent Rate (AER). 

The amount of interest you’ll earn will depend on several things, such as how much you deposit, what the interest rate is and whether that interest rate is fixed or variable. The type of lump sum savings account that tends to offer more competitive interest rates are typically fixed rate bonds. You’ll find out more about these types of accounts below. 

What to consider when opening a lump sum savings account

The best lump sum savings account for you will depend on how long you’re prepared to leave your money untouched for, how much you want to deposit and how you want to be paid your interest.

Another consideration is tax. The personal savings allowance means basic-rate taxpayers can earn £1,000 interest without paying tax. Higher-rate (40%) taxpayers can earn £500 interest before paying tax, but additional-rate taxpayers don’t get an allowance. 

Make sure you research the right lump sum savings account for you, so you get the best return on your deposit over a term you’re comfortable with.

Is your deposit secure in a lump sum savings account?

The Financial Services Compensation Scheme (FSCS) offers deposit protection on savings accounts from regulated UK banks. This protection covers deposits of up to £85,000 (including interest) per person, per banking group. If you have a lump sum of more than £85,000, you could consider splitting it between different banking groups.

All of the lump sum savings accounts you’ll find in our UK marketplace include deposit protection, with accounts from UK banks providing FSCS protection. We won’t let you open an account with more than £85,000, so you will have the peace of mind that your savings are protected.

What's the best lump sum savings account for you?

Fixed rate bonds 

With a fixed rate bond or fixed rate savings account, your money is locked in for a set term and the interest rate is fixed. That means you’ll know how much interest you’ll earn. Which is the best fixed rate bond for you depends on how long you can lock in your money; the longer the term, the more interest you’ll earn. Fixed rate savings accounts typically last one year, two years, three years, five years or six months

Currently, the highest rate of interest you can earn from a fixed rate bond through our marketplace is 2.40% AER.

Notice accounts

With a notice account, you can keep the account open for as long as you want to. You’ll need to give your savings provider advance notice before making a withdrawal, with typical notice periods of between 30 and 90 days.

Notice accounts provide a mix of the benefits from other types of savings accounts. They offer comparable competitive interest rates to fixed rate bonds and flexibility that’s comparable to an easy access account.

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

  • Accounts are free to open
  • Your savings aren’t at risk
  • Competitive interest rates
  • Higher interest rates on longer-term accounts
  • You’ll know when your savings are accessible
  • You can easily manage your savings online
  • The FSCS protects your money up to £85,000 per person, per banking group
  • Choose from a range of lump sum savings accounts from UK banks

Lump sum savings account FAQs

What should I do with a lump sum of money?

If you have a lump sum of money, you have a few options to consider when it comes to what to do with it and how to best make it work for you. Of course, this depends on your financial goals and personal situation. For example, you might want to consider depositing it into a savings account, paying off debt or splitting it several ways. 

Here are some ideas for what to do with a lump sum:

Are lump sum savings accounts a good investment?

Lump sum savings accounts can be a good investment as they are designed specifically for larger sums of money. They often offer a competitive rate of interest, are quick and easy to set up and you can choose fixed rate or variable terms. This means you can choose the set-up that best suits your circumstances. 

What’s the best lump sum savings account?

When looking for the best lump sum savings account, it’s important to shop around and compare the market. While you’ll probably want to seek out good interest rates, you also want to make sure that you check the terms and conditions and think carefully about whether a fixed rate term would suit (if you can afford to lock your money in), or if you want something with less restricted access. And always read the small print.

Are lump sum savings accounts protected by the FSCS? 

Lump sum savings accounts are protected by the FSCS up to £85,000 per person, per banking group, or £170,000 if you have a joint lump sum savings account.

Applying for a lump sum savings account

If you want to quickly and easily open lump sum savings accounts with attractive rates from a range of banks, register for a Raisin UK Account and log in to apply today. It’s free to open an account, and once you’ve been approved, all you need to do is deposit your lump sum and watch it grow.

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