Holiday savings accounts

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Planning a holiday? If you’re planning a holiday, it’s usually more affordable if you save the money you need to pay for it, rather than incurring debt. On this page, we look at which holiday savings accounts in the UK could best help you save and how long it might take to save for your holiday.

The rundown
  • Competitive interest: Opening a holiday savings account that pays a competitive interest rate can help you reach your holiday savings goals that little bit faster
  • Account types: Holiday savings accounts such as fixed rate bonds may be ideal if you have a lump sum saved up that you won’t need to access yet, whereas a notice account may be better if you want to top up your savings regularly
  • Savings goals: How long it will take to reach your holiday savings goals depends on how much you can afford to set aside each month, as well as the type of holiday savings account you choose

How much does a holiday cost?

It’s a bit like asking “how long is a piece of string?”, as there are so many variables, but the Office for National Statistics (ONS) found that UK residents spent £58.5 billion on visits abroad in 2022. The average cost of a single trip abroad was £857, and research from Evolution Money suggests that for a UK family of four taking a two-week break, the average holiday cost is £4792. Opening a savings account can help you prepare for the cost of a holiday.

Which type of holiday savings accounts should I consider?

You’ll find different types of savings accounts on our marketplace that could help when you’re trying to top up your holiday savings jar, 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 access your money at short notice, typically between 30 and 90 days.

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How do I earn interest from my holiday savings?

Whether you already have a lump sum saved up that you don’t need to spend yet, or you’re planning to save gradually, opening a high-interest holiday savings account will enable you to make your money work harder. Exactly how much interest you’ll receive depends on various factors such as the value of your savings, the type of account and whether interest is compounded.

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.

Our top fixed rate holiday savings account is currently a 3-year fixed rate bond paying 3.01%.

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.

Our leading notice account is currently paying 1.95% interest, with a 95-day notice period.

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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

Time Total Savings
3 months £60
6 months £120
1 year £240
2 years £480

£50 saved per month

Time Total Savings
3 months £150
6 months £300
1 year £600
2 years £1,200

£100 saved per month

Time Total Savings
3 months £300
6 months £600
1 year £1,200
2 years £2,400

£200 saved per month

Time Total Savings
3 months £600
6 months £1,200
1 year £2,400
2 years £4,800

£250 saved per month

Time Total Savings
3 months £750
6 months £1,500
1 year £3,000
2 years £6,000
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Opening holiday savings accounts with Raisin UK

Quickly and easily apply for savings accounts with attractive rates from a range of UK partner banks by registering for a Raisin UK Account, then logging in to apply for free in just a few clicks.

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