Types of savings account

Savings accounts all do the same basic job: a place to put away money you would like to save for the future, for emergencies, or to buy expensive things¹. What separates one type from another is the trade you make. Every account sits somewhere on a scale between full access to your money and a better return, and the main types differ mainly in how quickly you can withdraw, how much you can pay in, and whether the interest rate is fixed or can change.

The main types sold in the UK are easy access accounts, regular savings accounts, notice accounts, fixed-rate bonds, children's accounts, cash ISAs and the government-backed accounts from NS&I, including Premium Bonds. Credit unions also offer savings accounts, which either pay interest or a share of any profits². This page sets out each type side by side: what it offers, what it costs you in access or flexibility, and who it tends to suit.

The main types of savings account at a glance

A savings account is simply an account for putting money aside, and you can open one with your bank or with a credit union⁸. Keeping savings in a separate account from your spending money is a widely recommended habit, because it makes savings harder to dip into by accident⁹.

The types differ on three things above all: access, deposit limits and rate certainty.

One thing worth knowing before you open anything: if you are opening a savings account other than an instant savings account, you will be given less detailed information than for other types of account, possibly in a summary box, which will help you compare different accounts from different banks and building societies¹⁰. The summary box is where the key conditions live, so it is worth reading even when the law requires less of the provider.

Easy access accounts: take money out when you need it

Easy access savings accounts are a flexible type of savings account where you can take money out if you need to¹¹. Tesco Bank describes the same product from the other direction: instant access savings accounts let you pay in and take out money whenever you need to, and are sometimes called easy access accounts³. The two names describe the same thing, and providers use them interchangeably.

The point of the product is that there is no waiting period and no notice to give. Gatehouse Bank's own account summary states it plainly: this is an Easy Access savings account, and you can access your money at any time without restrictions¹². That makes the type the natural home for money you may need at short notice, and debt charity Stepchange recommends an instant access account specifically for emergency savings, because the whole point of a rainy-day fund is that it is there when the rain arrives¹³.

What you give up is rate certainty and, usually, some yield. Easy access rates are normally variable, so the provider can cut them, and independent analysis has found a difference of more than a percentage point between the best easy access and the top fixed-rate deal¹⁴. Some accounts also carry introductory bonus rates that fall away after a year, which is worth checking in the summary box.

Two cautions apply. First, "easy access" is a description of the withdrawal rules, not a promise that the rate will stay competitive, so it is worth reviewing the account periodically. Second, some accounts described as easy access have been withdrawn from sale: NS&I's Easy Access Savings Account, for example, has been closed completely since 27 July 2012, and holders can apply to have their money repaid using a simple online form¹⁵. A closed account is not a lost one, but it may no longer be the best home for the money.

The dedicated guide to easy access savings accounts covers the type in more depth, and limited access accounts covers the middle ground where withdrawals are capped to a set number each year.

Monthly limits: regular savers typically take £100 to £500 a month

Regular savings accounts work differently from every other type: instead of a lump sum, you pay money in monthly, and other conditions may also apply. The Consumer Council notes that with a regular savings account you will normally agree to hold your savings in that account for a certain amount of time¹⁶.

The defining feature is the monthly deposit cap. Which? analysis of the market found regular savers typically impose a cap on deposits of between £250 and £500 a month⁴, and its guide to emergency funds puts the typical figure at about £200, with £250 the maximum on many accounts¹⁷. Children's regular savings accounts tend to have lower ceilings: the top accounts usually allow a maximum of £100 to £200 to be paid in per month¹⁸.

At the government-backed end, the Help to Save scheme is the most tightly capped of all. Savers can pay in between £1 and £50 a month¹⁹, a limit set in legislation: the maximum monthly amount which an account holder may pay into an account is £50²⁰. In return, savers receive 50p for every £1 they save over four years²¹, which is a far larger return than any ordinary account pays, but only for people on qualifying benefits such as Universal Credit or Working Tax Credit. The full rules are on the Help to Save page.

Restrictions on who can open them are common. Which? found that eight in 10 of the top accounts restrict who can open them⁴, often to the provider's own current account customers. Some providers allow saving from as little as £1 a month and offer higher interest in return for the commitment²².

The trade is clear: a regular saver usually pays a higher rate than an easy access account, but you cannot put a lump sum in, and withdrawals are often limited or penalised. Whether that suits you depends on whether you are saving from income, month by month, or have money to deposit all at once. The comparison of regular saver vs easy access accounts works through the sums, and regular savings accounts explains the type in full.

Notice accounts: usually 30 to 120 days' notice to withdraw

A notice account sits between easy access and fixed term. You can get your money out, but only after telling the provider in advance and waiting out the notice period. The lengths vary widely across the market: Ecology Building Society offers a 35-day notice account²³ and a 180-day version²³, and State Bank of India UK lists both 35-day and 90-day versions²⁴. Stepchange notes that some accounts require a 90-day notice period²⁵.

The mechanics are simple but worth understanding before you commit. The clock starts when you give notice, not when you first think you might need the money. Stepchange notes that some accounts require a 90-day notice period²⁵, and Ecology Building Society's 180-day notice account allows access to your savings with 180 days' notice, up to a maximum of 2 times a year²³. If your car fails its MOT on a Monday, a notice account will not help you pay for it on the Tuesday.

The stages of withdrawing from a notice account, from giving notice to the money arriving.

Notice accounts usually pay variable rates, so the provider can reduce the rate during the notice period, and you would still be bound by the waiting time to move your money. That combination, a rate that can fall plus a delay in exiting, is the main risk of the type. The pages on notice savings accounts, notice accounts vs easy access and the penalty for withdrawing early cover the details.

Fixed term accounts and bonds lock your money away

Fixed-rate savings bonds are interest-paying savings accounts offered by banks and building societies for a fixed amount of time⁵. MoneyHelper describes the trade directly: these products usually require you to tie up your money from between six months and five years, and you usually get a higher interest rate than from instant access savings accounts, with the longer you lock your money in, the higher the rate is likely to be⁵.

The rate is fixed for the whole term, which is the type's main attraction: unlike easy access and notice accounts, the provider cannot cut it, and you know exactly what the balance will be at maturity. The cost is total loss of access. Withdrawing early is usually not allowed at all, or only with a heavy penalty in lost interest, and the page on early withdrawal from fixed-rate bonds explains what providers actually do.

Because your money is committed for years, the protection rules matter more than usual. FSCS deposit protection covers money in current, saving and fixed-term deposit accounts⁷, so a fixed-term bond with a licensed provider is protected in the same way as any other deposit, up to the usual limit. The details are on the FSCS protection page.

The end of the term has its own rules. The FCA's Banking Conduct of Business sourcebook requires firms to behave properly at maturity: a firm should provide notice of the expiry of the fixed term to the banking customer on paper or in another durable medium in good time before the end of the fixed term, explaining the consequences of expiry and the options available for dealing with the balance²⁸. The same rule appears in the wider BCOBS guidance²⁹. In practice, providers usually move matured balances into a maturity account, often an easy access one, and write to you beforehand. That letter is your cue to check the new rate, because maturity accounts are rarely the most competitive.

The guides to fixed-rate bonds and fixed-term savings, what happens when a fixed-rate account matures and easy access vs fixed-rate savings take the type further.

Cash ISAs and other ISA types

A cash ISA is a savings account with a tax wrapper. The Financial Ombudsman Service describes the family plainly: cash ISAs work like a tax-free savings account⁶. Official statistics list four main types of ISA: cash ISA, stocks and shares ISA, Innovative Finance ISA and Lifetime ISA³⁰, and the underlying legislation sets out the same four: the account is set up as a stocks and shares account, a cash account, an innovative finance account or a Lifetime ISA³¹. Independent guides summarise the whole family as products that allow tax-free investment into cash, funds and equities³².

For a saver comparing account types, the cash ISA is the one that behaves most like an ordinary savings account. Access rules vary by product, exactly as they do outside the ISA wrapper: some cash ISAs are easy access, some are fixed term, and the notice and regular saver structures exist inside the wrapper too. The tax treatment is the difference, and it is covered in the next section.

Two rules govern how many you can hold. NS&I's guidance states that you can open as many different adult ISA accounts as you like, as long as you keep within the ISA allowance rules³³. And since 6 April 2024, the old one-of-each-type rule has gone: savers can now open and pay into multiple ISAs of the same type annually³⁴, a change Which? reported as replacing the previous rules³⁵. So a saver can, in principle, hold several cash ISAs with several providers at once, provided the total paid in across all ISAs stays within the annual allowance.

The Lifetime ISA is a special case with its own bonus and its own restrictions, aimed at first-time buyers and those saving for later life; the ombudsman covers complaints about it alongside other ISA types³⁶. The ISAs section covers the whole family, and NS&I accounts and bonds covers the government-backed provider, including Premium Bonds.

Tax on savings interest and the personal savings allowance

Interest on ordinary savings accounts is taxable income, but most savers pay no tax on it because of two overlapping allowances. HMRC's policy statement introduced a tax-free Personal Savings Allowance (PSA) for savings income such as interest paid to individuals³⁷, and official statistics describe the structure as two overlapping savings allowances: the Starting Rate for Savings (SRS) and the Personal Savings Allowance (PSA)³⁸.

The practical effect is that interest counts towards your income for tax purposes only once it exceeds these allowances. Which?'s comparison of a standard savings account against a cash ISA puts it in a table: interest on the standard account is taxed above the personal savings allowance, while ISA interest is not³⁹. The starting rate gives some savers extra headroom on top of the PSA, and the two are explained on the personal savings allowance and starting rate for savings pages, with the full mechanics in how tax on savings interest works.

ISAs sit outside all of this. Savings in tax-free accounts like Individual Savings Accounts do not count towards the personal savings allowance, because ISA interest is itself tax free⁴⁰. The Consumer Council makes the same point from the consumer's side: Individual Savings Accounts offer you tax free interest on savings¹⁶.

Whether a cash ISA beats an ordinary account therefore depends on your tax position: a saver whose interest stays within the allowances gets no tax benefit from the wrapper, while a saver whose interest exceeds them does. Rising rates have pushed more people over the threshold, and Which? has reported on savers facing tax bills as a result³⁴. The comparison page cash ISA vs ordinary savings works through the decision, and tax on savings interest for Scottish taxpayers covers the different income tax bands north of the border.

Choosing between easy access, notice and fixed term

The choice between the main types comes down to one question: when will you need the money? Everything else follows from the answer.

Money you may need at any moment, an emergency fund above all, belongs where you can reach it without asking. Stepchange's guidance is to make sure you use an instant access savings account for emergency savings¹³. Money you are confident you will not touch, a sum earmarked for something years away, can earn more in a fixed-rate bond, where you usually get a higher interest rate than from instant access savings accounts⁵. Money in between, which you expect to need but can plan ahead for, is what notice accounts are for.

The rate gap is real. Independent analysis found a difference of more than a percentage point between the best easy-access and top fixed-rate deal¹⁴. Whether that gap is worth losing access for depends on the sum and your circumstances: on a small balance the extra interest is small in cash terms, on a large one it is not.

How much access each main account type gives, and what you give up for the rate.

Whichever type you choose, the same protections apply. FSCS protection covers money in current, saving and fixed-term deposit accounts⁷, and complaints about how a provider has behaved can be taken to the Financial Ombudsman Service. The FCA's rules also require firms to give notice of the expiry of a fixed term in good time, explaining the consequences and the options for the balance²⁸, so a saver at the end of a term should expect to hear from the provider before the money moves.

If you are unsure where to start, free impartial help is available from MoneyHelper, and if money is tight, the debt section covers getting advice from charities such as Stepchange before you commit savings you may need for essentials.