Choosing where to keep your savings can depend on several factors, including how quickly you need access to your money, the return you want to achieve and the type of savings goal you have.
With different options available, such as easy access accounts, fixed-rate savings accounts, notice accounts and ISAs, understanding how each option works can help you make a more informed decision.
This guide explains the different types of savings accounts available, how interest rates and AER work, important savings terms and what to consider when comparing your options.
Key Takeaways
Different savings accounts offer different levels of access, flexibility and potential returns
Easy access accounts allow quicker withdrawals, while fixed-rate accounts usually offer less flexibility in exchange for a fixed return
AER helps you compare savings accounts by showing the potential yearly return
ISAs allow eligible savings and investments to grow within a tax-efficient account
Understanding savings terms can help you choose an account that matches your financial goals
What Is a Savings Account?
A savings account is a financial account designed to help you store money while earning interest on your balance.
Unlike a current account, which is usually used for everyday spending and payments, savings accounts are designed to help you build your money over time. Different savings accounts offer different features, including:
How much interest you can earn
How easily you can access your money
Whether withdrawals are restricted
Whether the interest rate is fixed or variable
The right option depends on what you are saving for and how you want your money to work for you.
Types of Savings Accounts
There are several types of savings accounts available, each offering different levels of flexibility and access.
Easy Access Savings Accounts
An Easy Access savings account gives your money a place to grow without putting it out of reach. It keeps your savings separate from everyday spending, while still making it easier to withdraw money if you need to. For many people, the mixture of flexibility and growth is the main draw of an Easy Access account.
This type of account could work well for emergency funds, shorter-term goals, or savings you may need sooner.
These accounts can be useful for:
Emergency savings
Short-term goals
Money you may need access to quickly
You can usually withdraw money without needing to provide notice, although some providers may apply limits or restrictions. Minimum opening deposits vary between providers, with some accounts available from a low initial deposit.
Compare Easy Access Savings Accounts
Fixed Term Savings Accounts
A fixed-term savings account allows you to lock away your money for an agreed period in return for a fixed interest rate.
These accounts can provide certainty because the rate remains unchanged throughout the agreed term.
However, they usually offer less flexibility than easy access accounts, as withdrawals may be restricted or unavailable before the end of the term.
Fixed-rate savings accounts may suit people who know they will not need access to their money during the agreed period.
Compare Fixed-Term Savings Accounts
Notice Savings Accounts
A notice account sits between an easy access account and a fixed-rate savings account. It allows you to withdraw your money, but only after you provide your account provider with a mandatory notice period.
You cannot access your cash instantly without initiating this notice window. In exchange for this restriction, providers usually offer more competitive interest rates than standard easy-access products.
Notice periods can vary depending on the account and may include:
30 days
60 days
90 days
Compare Notice Savings Accounts
Individual Savings Accounts (ISAs)
An ISA (Individual Savings Account) is a UK scheme letting you save or invest completely tax-free. You pay no income, dividend, or capital gains tax on your returns.
The annual contribution limit is £20,000 per tax year, which runs from April 6th to April 5th. Any unused allowance is lost; it does not roll over.
There are four main types of ISAs:
Cash ISA: A Cash ISA allows you to save money while earning interest without paying tax on eligible returns within the ISA.
Stocks and Shares ISA: A Stocks and Shares ISA allows you to invest money in assets such as shares and funds.
Lifetime ISA: A Lifetime ISA is designed to help eligible savers save towards a first home or later life, subject to specific rules.
Junior ISA: A Junior ISA allows savings or investments to be held for children under 18.
ISA rules and allowances can change, so always check the latest guidance before opening an account.
How Do Savings Account Interest Rates Work?
The interest rate on a savings account determines how much you could earn on your balance.
Rates may be:
Fixed Interest Rates: A fixed rate remains the same for an agreed period.
Variable Interest Rates: A variable rate can change over time depending on factors such as market conditions and provider decisions.
When comparing savings accounts, it is important to look beyond the headline rate and consider:
Account restrictions
Withdrawal rules
Minimum deposits
How interest is paid
What Is AER (Annual Equivalent Rate)?
AER stands for Annual Equivalent Rate.
It shows what interest you could earn over a year, taking into account how often interest is added to your account.
AER makes it easier to compare different savings accounts because it provides a standard way of showing potential returns.
For example, two accounts may calculate interest differently, but the AER allows you to compare the overall annual rate.
What Is Compound Interest?
Compound interest means earning interest on both your original savings and the interest already added to your account.
Over time, this can help your savings grow because your balance increases and future interest is calculated on the larger amount.
The impact of compound interest depends on factors such as:
Interest rate
Amount saved
How often interest is added
How long money remains in the account
What Is FSCS Protection?
The Financial Services Compensation Scheme (FSCS) provides protection for eligible deposits held with authorised UK banks, building societies and credit unions.
If an authorised financial provider fails, eligible savings may be protected up to the applicable compensation limit.
Protection applies based on the banking licence rather than individual account numbers, so it is important to understand how providers are connected.
Choosing the Right Savings Account
The right savings account depends on your personal goals and how you want to access your money.
Before choosing an account, consider:
How Long You Want to Save
Short-term goals may benefit from flexible access, while longer-term savings may suit accounts with fewer withdrawal options.
How Often You Need Access
If you may need your money quickly, an easy access account could be more suitable.
The Interest Rate Offered
Compare AER rather and not just the advertised interest rate.
Account Restrictions
Check withdrawal limits, notice periods and minimum deposits.
Ready to Compare Savings Options?
Explore savings accounts and compare features to find an option that matches your saving goals.
Compare Savings Accounts & Rates
Savings Accounts FAQs
What type of savings account is best?
The best savings account depends on your goals, how often you need access to your money and whether you prioritise flexibility or a guaranteed return.
What is the difference between easy access and fixed-rate savings?
Easy access accounts allow quicker withdrawals, while fixed-rate accounts usually require you to keep money saved for an agreed period.
Is a savings account better than keeping money in a current account?
A savings account may allow your money to earn interest, whereas money held in a current account may not provide the same potential return.
What does AER mean on a savings account?
AER shows the annual equivalent return on a savings account, making it easier to compare different products.
Are savings accounts protected?
Eligible deposits held with authorised UK providers may benefit from FSCS protection up to the applicable limit.
Savings Glossary
AER (Annual Equivalent Rate): A standardised way of showing the potential yearly interest earned on a savings account.
Interest Rate: The percentage return paid by a provider on money held in a savings account.
Compound Interest: Interest earned on both the original savings amount and previously earned interest.
Liquidity: How quickly and easily you can access your money without restrictions or penalties.
Withdrawal Restrictions: Rules that limit when or how you can remove money from a savings account.
Fixed Rate: An interest rate that remains unchanged for an agreed period.
Variable Rate: An interest rate that can change over time.
Savings Term: The agreed period that money is held within a particular savings product.
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Editorial Disclaimer: This content is provided for general informational purposes only and should not be considered financial advice. It is not intended to provide personalised recommendations or guarantees of any outcome, including changes to your interest yields or approval decisions from savings providers. Account structures and interest rates vary between providers and are based on a range of terms and conditions.
This content reflects general information at the time of publication and is not endorsed by any bank, lender, or financial institution. You should always consider your own circumstances and, where appropriate, seek independent financial advice before making financial decisions. Nothing in this content should be interpreted as a recommendation to take, or refrain from taking, any specific financial action.
Page Last Reviewed: 20/07/2026