That's why it can be a good idea to have a number of different savings accounts, with each one for a specific type of saving. For example, you could use one savings account to cover unexpected costs, one to save up for a holiday, one to build up a home deposit, and so on.
Savings accounts tend to differ in 3 main ways:
| Account type | Key features |
Good for? |
|---|---|---|
| Instant access savings accounts (sometimes called easy access) |
Fast or immediate access to your money, but the interest rates on offer are often very low. |
Money you don't need for day to day expenses, but that you might need at short notice for emergency or unexpected expenses. |
| Regular or basic savings account |
Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return. |
Putting aside a proportion of your monthly income. |
| Notice accounts |
You must give notice of your intention to make a withdrawal. Depending on the account, the notice period can range from a few days to as much as 180 days. In return, they can offer more attractive interest rates. |
Putting away money to meet longer term savings goals. |
| Fixed rate savings (also called term deposits) |
Better interest rates than a regular savings account. Your money is 'locked in' and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts. |
Depositing funds that you know you aren't going to need for a while; can also be suitable for meeting longer term savings goals. |
| Investments |
Comes with the risk that you might not get back what you invest. But if you're able to set your money aside for 5 years or more, investing in funds or shares has the potential to make your money work harder than than it would in a savings account.
We explain the pros and cons of investing money in more detail here. |
Setting aside money you're not going to need for years, such as your retirement savings. |
| Account type |
Instant access savings accounts (sometimes called easy access) |
Instant access savings accounts (sometimes called easy access) |
|---|---|---|
| Key features |
Fast or immediate access to your money, but the interest rates on offer are often very low. |
Fast or immediate access to your money, but the interest rates on offer are often very low. |
| Good for? |
Money you don't need for day to day expenses, but that you might need at short notice for emergency or unexpected expenses. |
Money you don't need for day to day expenses, but that you might need at short notice for emergency or unexpected expenses. |
| Account type |
Regular or basic savings account |
Regular or basic savings account |
| Key features |
Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return. |
Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return. |
| Good for? |
Putting aside a proportion of your monthly income. |
Putting aside a proportion of your monthly income. |
| Account type |
Notice accounts |
Notice accounts |
| Key features |
You must give notice of your intention to make a withdrawal. Depending on the account, the notice period can range from a few days to as much as 180 days. In return, they can offer more attractive interest rates. |
You must give notice of your intention to make a withdrawal. Depending on the account, the notice period can range from a few days to as much as 180 days. In return, they can offer more attractive interest rates. |
| Good for? |
Putting away money to meet longer term savings goals. |
Putting away money to meet longer term savings goals. |
| Account type |
Fixed rate savings (also called term deposits) |
Fixed rate savings (also called term deposits) |
| Key features |
Better interest rates than a regular savings account. Your money is 'locked in' and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts. |
Better interest rates than a regular savings account. Your money is 'locked in' and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts. |
| Good for? |
Depositing funds that you know you aren't going to need for a while; can also be suitable for meeting longer term savings goals. |
Depositing funds that you know you aren't going to need for a while; can also be suitable for meeting longer term savings goals. |
| Account type |
Investments |
Investments |
| Key features |
Comes with the risk that you might not get back what you invest. But if you're able to set your money aside for 5 years or more, investing in funds or shares has the potential to make your money work harder than than it would in a savings account.
We explain the pros and cons of investing money in more detail here. |
Comes with the risk that you might not get back what you invest. But if you're able to set your money aside for 5 years or more, investing in funds or shares has the potential to make your money work harder than than it would in a savings account.
We explain the pros and cons of investing money in more detail here. |
| Good for? |
Setting aside money you're not going to need for years, such as your retirement savings. |
Setting aside money you're not going to need for years, such as your retirement savings. |
