Saving Accounts

Guide: Personal Finance

Types of Savings Accounts

  • Regular Savings Accounts - Used by people who are keen to save for a special occasion or purchase, this type of savings account often pays out a high rate of interest but usually has restrictions on the number of withdrawals you can make. If the number of withdrawals is exceeded, it can result in a decrease in the rate of interest paid, and in worst circumstances, can even lead to the account being closed. Some accounts will require a minimum amount to be deposited monthly, and a minimum number of deposits per year.
  • No Notice/Instant Access Accounts - Used by people who have spare cash to save, but want regular access to their savings. An Instant Access account typically will allow you to make a withdrawal with no notice, and without penalising you. However, read the fine print – some may restrict the number of withdrawals you can make in a year, or require you to carry a minimum balance in the account. Some accounts will also quote a very high introductory rate, but quote a much lower AER for customers who take advantage of this flexibility.
  • Notice Accounts - Used by people who have cash to spare, and don’t need regular access to their savings. A Notice Account requires you to make a request in advance of making a withdrawal, and the amount of notice you must give can range from a few days to a few months. As with Instant Access Accounts, if you make too many withdrawals in a year you may be penalised for this. Often a very good introductory rate will be quoted, but a much lower rate will apply to customers who make withdrawals within a certain period.
  • Term Accounts/Fixed Rate Accounts - Used by people who like to know exactly how much interest they will earn, term accounts (or fixed rate accounts as they are also known) offer a fixed rate of interest over a defined period. The guaranteed interest comes at a price – in many cases if you need to access your savings before the term expires then you will lose some, if not all, of your accrued interest. There may also be other restrictions to term accounts – such as how much and how often you can make deposits, or a minimum initial balance.
  • Children’s Savings Accounts - Used by people who are saving for their children, these savings accounts often pay higher rates of interest than traditional savings accounts. Don’t we wish we were still young! Children’s accounts may offer both a fixed and variable rate of interest and access is often limited to post or in-branch.

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