Where should I save?

A savings account can help you have access to cash when you need it the most. But which is right for you? Below is a run through of the different types of accounts designed for saving.

Cash ISA

ISA stands for Individual Savings Account and is the name of a Government scheme to allow people to save money without having to pay tax. This tax year, the total ISA allowance per adult is £11,280.

Interest rate: shop around for the best rate. You will find both fixed rate and variable ISAs, but both have the benefit of being tax-free.
Minimum amount to open: Varies, usually only £1
Best for: If you received a lump of cash from friends or family and you want to save it for a rainy day. Also good for long term savings, although some ISA’s allow for instant access.

Instant access

These accounts allow you access to your savings instantly or within a few days without a penalty.

Interest rate: As the account is so flexible, a lower rate will usually be offered than other savings accounts.
Minimum amount to open: £0
Best use: Good as an emergency fund, or a chance to start saving yet still allowing you access to the cash should you really need it.

Notice Accounts

These require plenty of notice to be given before withdrawals can be made, usually between one and three months. However you can sometimes access the money instantly if you are willing to pay a penalty.

Interest rate: Higher than instant access accounts, variable.
Minimum amount to open: It depends, but you will probably need at least around £100.
Best use: Trust funds, inheritance, larger sums of cash that you want to build up but don’t need to get your hands on easily, such as a mortgage down payment.

Bond or Term Accounts

These pay much higher rates of interest because they do not allow any withdrawals until a set date.

Interest rate: Fixed at a competitive rate
Minimum amount to open: Around £1000.
Best use: Inheritance or similar, such as money to pay for college fees or a big wedding.

Regular savers accounts

These require a commitment to invest each month, encouraging regular savings rather than lump sum investments. Access varies from instant to fixed term.

Interest rate: Variable.
Minimum amount to open: A minimum and maximum investment per month is often required; these vary from between £10 – £20 min and £100 – £2000 max.

Best for: Easy savings where you put aside a small amount from your pay cheque each month. It may only seem like a small saving, but it all adds up.

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