Lump sum savings accounts

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If you can afford to lock your money away 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 lump sum savings accounts at Raisin UK are deposit protected and free to open. Choose from fixed or variable terms and open your account quickly online with a single deposit.

Key takeaways
  • Growth: Depositing a lump sum into a savings account can help you grow your money quickly

  • Deposit protection: Savings accounts offered by UK regulated banks at Raisin UK are protected by the Financial Services Compensation Scheme (FSCS)

  • Free: Most savings accounts are free to open with small minimum deposit amounts

What is a lump sum?

A lump sum is a single payment made at a particular time, as opposed to a number of smaller payments or instalments.

What are lump sum savings accounts?

Lump sum savings accounts provide competitive rates of interest over a term of your choosing. As the name implies, you can only open these accounts with a single 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 (more on these types of accounts below). Alternatively, if you have a lump sum of up to £20,000, it might be worth looking into a cash ISA as it can be a tax-efficient way to save.

With the cost of living crisis continuing to bite, you may find your disposable income squeezed. Maximising the interest on your lump sum savings can help to ease that pressure.



How do lump sum savings accounts work?

With a lump sum savings account, you pay in a one-off deposit and simply let your savings accumulate interest over time. The amount of money 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

  • Withdrawn a tax-free pension lump sum

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

  • The amount of time your lump sum is held in the account

What are the benefits of a lump sum savings account?

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

  • You have a larger sum of money that could earn more interest

  • 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 savings account?

In short, yes, you can absolutely grow your savings if you place them in 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 depends on several things, such as how much money you deposit, what the interest rate is and whether that interest rate is fixed or variable. Fixed rate bonds are generally considered one of the best lump sum savings accounts for competitive interest rates. You’ll find out more about these types of savings 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 up to £1,000 in 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 best lump sum savings account for you, so you get the highest 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 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 away for a set term and the interest rate is fixed for that time. This means you know how much interest you’ll earn. The best fixed rate bond for you depends on how long you can keep your money locked away; the longer the term, the more interest you’ll earn. You might therefore consider fixed rate bonds as they can offer some of the best interest rates for your lump sum savings. Fixed rate bonds typically last one year, two years, three years, five years or six months.

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 withdrawing money, with typical notice periods ranging from 30 to 90 days.

Notice accounts provide a mix of the benefits offered by other types of savings accounts. Similarly to fixed rate bonds, they provide competitive interest rates, and offer a level of flexibility comparable to an easy access account. Notice accounts may therefore be considered as a suitable savings account for your lump sum.

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 savings accounts
  • You’ll know when you can access your savings
  • 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 the money into a savings account to earn interest, 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 for your needs, it’s important to shop around and compare the market. While you’ll probably want to seek out good interest rates, don’t forget to check the terms and conditions of the account. Think carefully about whether a fixed rate term would suit your situation (if you can afford to lock your money away), or if you would prefer a more accessible savings account. It’s a good idea to read the small print when deciding on a savings account.

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 a lump sum savings account with attractive rates from a range of partner banks, register for a Raisin UK Account and 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.