Detailed Guide to Savings Accounts


Savings accounts never go out of fashion. It doesn't matter if the economy is in crisis or not – people always try to put money aside for darker days. Savings accounts are not just for saving but also for making money out of your savings without making risky investments. Finding the right savings account is not very easy. There are two main things you have to consider – rates and terms. They vary a lot between banks and accounts and to get the best rate will mean that you will be getting the most money for your savings.

Savings accounts and rates
On the market at the moment the savings accounts offer rates between 2.50% and 3.20%. Most of the accounts don't require a minimum amount to start saving but some banks do have this as a requirement and beware that you don't fall under the minimum to ensure that you will be paid your interest. You can choose from monthly or annual payments of the interest gained.

Savings accounts and terms
The terms vary from 30 days to 3 or 5 years. During this period some banks restrict the withdrawals from the savings account to one a year. You have to make sure you keep this to get the interest payment.

Savings accounts
INGdirect.co.uk is probably the market leader for savings accounts. At the moment they offer 3.10% interest with an extra 2.56% for the first year. There is no minimum to start saving with them. You can even go and deposit a pound. Another good feature is that you'll be able to withdraw money from your savings account without any limits. You'll get paid for your interest every month. This savings account is only available to new ING Direct customers.

If you are already with ING and you won't be able to save money with them at a good rate, we recommend you to visit Barclays.co.uk. They offer 3.25% AER paid per month as soon as there are no withdrawals during the time. If you are withdrawing, you'll be looking at 3.03%.

Santander have expanded aggressively since the financial crisis in 2008 and claim to have leveraged their ability to offer very competitive rates for all customers. Indeed, it appears as though their marketing department was right. They offer 4% AER which is very competitive and makes it highly considerable as a saving option. They do stipulate however that you pay a minimum of £25–£250 a month depending on your financial status which is worked out between you and Santander. The healthy interest rate is offset by the fact that you cannot make withdrawals unless you go directly to a branch. This is common for almost all savings accounts and you should not open a savings account if you need regular access to the money you're depositing.

HSBC offer a savings rate of 4% also on their savings account but they also allow banking by telephone as well as direct branch access. You'll also have to deposit up to £250 a month, again depending on your personal circumstances.

Bank of Scotland offer a lesser rate at 2%, but with their saving account you get access via Online banking as well as telephone and branch access. But for the online privilege you might be required to pay up to £500 a month, which seems like an awful lot for average savers considering you can't have access to it from withdrawal machines or any other transactions.

There are many other providers for accounts and therefore comes the need for comparison sites to help you choose which account suits you best. If you still hesitate with our offers – visit moneysupermarket.co.uk for a greater range.