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Savings accounts explained

If you’re new to saving, you might find it difficult to know where to start and understand what types of savings accounts might be right for you. On this page, we explain what savings accounts are, how they work and help you understand the different types of savings accounts so you can make an informed decision about how best to save.

What’s the definition of a savings account?

Let’s start with the basics; what is a savings account? Savings accounts are simply a type of account that you pay money into and earn interest from. As you put away savings, you grow their value by earning interest, which is paid by your savings provider.

How do savings accounts work?

Savings accounts offer variable or fixed interest rates. You’ll typically see the interest rate listed as a percentage and called the AER, or Annual Equivalent Rate, which makes it easier to compare savings accounts. The interest rate indicates how much you’ll earn on your savings over time.

Each type of savings account has its own terms, conditions and interest rates, which vary between financial providers and institutions, so it’s best to compare different types of savings accounts so you find one that suits your savings needs.

What are the different types of savings accounts?

The most common types of savings accounts are the following:

Notice accounts

A notice account is a type of savings account that typically offers competitive variable interest rates, so the rate you earn could go up or down. Notice accounts also offer the flexibility of withdrawing your money on a set notice period, usually between 30 and 90 days.

Fixed rate bonds

A fixed rate bond is a type of savings account that locks your money in at a fixed rate of interest for a specified amount of time, typically between six months and five years. Whichever term you choose, this type of account gives you the peace of mind that the rate you see is the rate you’ll get.

Easy access accounts

Easy access accounts are often the most flexible type of savings account and might be a good option if you’re new to saving, as they typically allow you to withdraw your money any time, although this flexibility means that the interest rates tend to be lower than other savings accounts. Similar to easy access, instant access accounts also allow you to top-up and withdraw money, but transactions are completed more quickly, usually within a couple of hours.

ISAs

An ISA, or individual savings account, is a tax-free savings or investment account. You can save up to a maximum of £20,000 per tax year (traditionally 6th April to 5th April), and there are different types of ISAs to choose from.

Is my money protected in a savings account?

If you open a savings account with a UK-regulated bank, your deposits will be protected by the Financial Services Compensation Scheme (FSCS) up to £85,000 per person, per banking group, in the event that the financial institution dissolves or fails.

All savings accounts offered on our marketplace are protected by the FSCS. We want to protect your savings, so you can only deposit up to £85,000 per person, per banking group with Raisin UK, ensuring you are covered up to the statutory limits.

How does Raisin UK work?

If you want to quickly and easily open different types of savings accounts with FSCS deposit protection, register for a Raisin UK Account and log in to apply. Opening an account is free, and once you’ve been approved, all you need to do is make a deposit and watch your savings grow.

If you have any further questions, our UK-based Customer Services Team will be happy to help.

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