There are many types of savings account you can open in the UK based on your banking needs. Keep reading to know about different types of savings accounts in the country and how to pick the right one for yourself.
Are you planning to open a savings account but unsure of which one is suitable for you? If you are a first-timer, then you must understand the types of accounts you can open and what facilities are offered under each account. Read further to know more about savings account types and how to pick the right one for you.
Savings account are the most common accounts that you can open to hold your money with the bank. If you are above 18 years of age and a UK resident, then it is quite simple to open an online savings account. Let’s look at the options available to you when it comes to the type of account:
- Easy-Access Savings Account:
- As the name suggests, it is the most flexible savings account option available. It allows you to deposit and withdraw money quickly and easily without any penalties.
- It offers attractive interest rates on your money, and you can open the account even with relatively smaller amounts.
- Fixed-Rate Savings Account:
- It allows you to lock in your money for a fixed term and earn interest on it at a fixed rate. You can open the account with as little as 1000 pounds sterling, and there is no upper limit.
- The account can be opened as an individual account or joint account for different terms as per available options.
- You cannot withdraw or close the account early before the term is reached. Similarly, you can’t make additional deposits in between the term.
- Notice Savings Account:
- A notice savings account is more flexible than fixed-rate savings account as it allows you to make unlimited and penalty-free withdrawals on prior notice of 45 to 95 days generally.
- The interests are calculated daily, and the rates are comparatively higher.
- Regular Savings Account:
- These are kind of recurring deposit accounts where you can invest monthly for a fixed term and at a fixed interest rate.
- The deposits can be made for flexible terms generally up to 10 years. Also, additional deposits are allowed during the term.
- Premature withdrawals are not allowed, and early closure can cost you an interest loss.
How to Choose the Suitable Account Type?
You must select the account type depending upon your financial requirements and preferences. For example, if you need complete flexibility of withdrawals and deposits at even lower interest rates, then prefer an easy-access account. Similarly, if you can bear to lock in a fixed amount for a fixed term, then a fixed rate savings account is more suitable. It is not a great idea to put your emergency funds in a fixed rate account since it doesn’t allow premature withdrawals. A good balance of flexibility and higher interest rates is offered by a notice savings account and must be preferred if you can pre-plan your withdrawals. Regular savers or those who want to save monthly in a disciplined way must opt for a regular savings account. However, it is not suitable for emergency savings as it offers only a little flexibility for withdrawals, which too comes with penalty charges.
The Final Word
There is an account type for each type of depositor. You must carefully study the terms and conditions of each account and choose the one that suits your financial planning and requirements.
Hemant Kumar is a project manager at Tridindia with more than nine years of commendable experience in writing about LMS, translation, and IT. His unmatched talent and passion for digital marketing gave him the opportunity to work as a multi-tasking project manager at TridIndia’s sister company, Link Building Corp. Today, he contributes to the world by imparting knowledge on SEO, link building and internet marketing etc., that helps business owners grow their online business.