Everything you wanted to know about holiday savings accounts
Table of Contents
Which savings accounts should I consider for my holiday savings?
You’ll find different types of savings accounts on our marketplace that could help when you’re saving for a holiday, including fixed rate bonds and notice accounts. For more savings tips, see our guide to saving for a holiday.
Fixed rate bonds allow you to lock away a lump sum for a set amount of time, usually between six months and five years. One of the benefits of fixed rate bonds is that they typically offer very competitive rates for a set amount of time. This means you’ll earn the same interest rate from the day you open the account until the end of your fixed term, which is particularly good in times of uncertainty and falling interest rates. Fixed term accounts might work well if you’re saving over a few years for a once-in-a-lifetime holiday.
You may also want to consider a notice account for your holiday savings. A notice account offers competitive variable interest rates and the flexibility to withdraw your money after a set notice period. This account might be right for you if you want to be able to access your holiday savings on fairly short-term notice, typically between 30 and 90 days.
How do I earn interest from my holiday savings?
Learn how to save:
Interest from a fixed rate bond
The interest you earn on a fixed rate bond doesn’t change, which means you’ll earn the same amount of interest throughout your fixed term. How interest is paid to you depends on the account you open, but typically, you’ll receive the interest you’ve earned along with the lump sum you initially deposited once you’ve reached the end of your term.
Interest from a notice account
Notice accounts offer variable interest rates and how you earn interest varies between financial institutions, although it’s usually paid whenever you make a withdrawal. It’s always best to check the details so you know when you’ll be paid the interest you earn.
Holiday savings plan: how long will it take to save for my holiday?
The following tables provide examples of holiday savings plans that show how much you could earn in different time frames. It will give you a general idea of how long you might need to save for in order to reach your target holiday savings, but of course, you may be able to save more, or you may choose a different type of holiday savings account.
£20 saved per month
£50 saved per month
£100 saved per month
£200 saved per month
£250 saved per month
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