Lump sum savings account

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.

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

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• Withdrawn a tax-free pension lump sum

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

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.

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.

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:

• Create an emergency fund 

• Pay off any debt you may have, such as loans, credit cards and store cards

• Invest in the stock market

• Buy a property

• Put it into a pension pot 

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.