Holiday savings accounts

HomeSavings › Holiday savings accounts

Thinking about going on 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 by using credit cards or loans. On this page, we look at which holiday savings accounts in the UK could best help you save, how to save for the holidays, and how long it might take to save for your holiday.

Key takeaways
  • 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 your finances and 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?

Ever wondered how much a holiday really costs? It’s a bit like asking “how long is a piece of string?”, as there are so many variables. 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 £4,792. When creating your own holiday budget, it can be useful to make sure it covers not only travel and accommodation, but also food, entertainment, and other expenses. Opening a savings account can help you to budget and prepare for the cost of a holiday.

What are holiday savings?

Holiday savings refer to the money you set aside as a way to fund your holidays or trips. It’s essentially a dedicated fund that you contribute to over time, ensuring you have the financial means to enjoy your holidays without relying on credit cards or loans. By budgeting and saving for a holiday regularly, you’ll be more likely to afford your getaway and have less stress when you’re there. Alternatively, you might have a lump sum of money that you would prefer to keep locked away, earning interest, until you’re ready to pay for your dream holiday. Exploring and comparing the best savings accounts for holidays, with features that align with your personal preferences, can help in your financial preparations.

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 schemes and tips on how to save money for a holiday or another financial goal, see our ultimate guide on how to save money. 

To find the best holiday savings account for you, there are a few options you might consider.

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 can be particularly beneficial 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 could be one of the best holiday savings accounts for you if you want to access your money at short notice, typically between 30 and 90 days.

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 start saving for a holiday gradually, opening a high-interest holiday savings account will enable you to make your money work harder. Exactly how much interest you’ll receive and when interest payments are made depends on various factors such as the value of your holiday 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. This ensures that you can plan and budget effectively for your financial goals.

Our top fixed rate bond is paying 5.2% AER.

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 generally helpful to check the payment details, so you know when you’ll be paid the interest you’ve earned.

Our leading notice account is currently paying 5.02% AER.

Holiday savings plan: how long will it take to save for my holiday?

Wondering how to save money for a holiday? The following tables provide examples of holiday savings plans that show how much you could accumulate in different time frames. They 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

3 months

6 months

1 year

2 years

Total Savings

£60

£120

£240

£480

£50 saved per month

Time

3 months

6 months

1 year

2 years

Total Savings

£150

£300

£600

£1,200

£100 saved per month

Time

3 months

6 months

1 year

2 years

Total Savings

£300

£600

£1,200

£2,400

£200 saved per month

Time

3 months

6 months

1 year

2 years

Total Savings

£600

£1,200

£2,400

£4,800

£250 saved per month

Time

3 months

6 months

1 year

2 years

Total Savings

£750

£1,500

£3,000

£6,000

Opening holiday savings accounts with Raisin UK

Quickly and easily apply for savings accounts with attractive rates from a range of UK partner banks and building societies by registering for a Raisin UK Account.