If you can afford to put a bit of money aside every so often, a savings account is a great way to make it go further – you’ll earn more generous rates of interest on it than if you had just left it to rest in your current account. However, the many different types of savings account can be confusing, with different providers offering multiple ways to save your money. Below we’ll explain some of the most common types of savings account so you can decide which is the best fit for you.
These accounts require you to inform the bank (“give notice”) whenever you want to withdraw money – usually in increments of 30 days, although some providers operate shorter notice periods. If you need the money before the time allotted by the notice period, you should still be able to access it, but you will incur a penalty. Interest rates are usually variable, which means they may be adjusted by the bank over time.
Easy access accounts
Easy access accounts work in a similar way to current accounts – you can withdraw cash whenever you want it, without the need to give notice. They typically offer a less generous rate of interest than other types of accounts, but you won’t incur penalties for withdrawing too much or too often.
Regular saver accounts
These are a great option for people who are saving up for a particular purpose: for instance, a deposit on a house or a new car. You will be required to deposit a minimum amount of money every month, but the benefit is that they usually come with a fixed interest rate that’s better than what you would get with other types of account.
Fixed-rate bonds are a type of savings account that, as the name suggests, offer a generous fixed rate of interest on your cash deposits. However, you will be unable to access the money at all until the term of the bond is up. They’re a great way to grow your money when interest rates are falling.
Individual savings accounts
Individual savings accounts, or Isas, are a way of saving money tax-free. Everybody can save up to £11,280 in Isas per year – half in cash Isas and the other half in stocks and shares Isas. Put simply, they’re an extremely efficient way to save money and work in a similar way to any other savings account – this means they might be easy access, notice, fixed rate et cetera. Find out more information at the Leeds Building Society Isa page.