Regardless of how much money you have in the bank, from £1 to £1 million, it makes sense to earn as much interest as possible on every penny by opening up a savings account.
Basic-rate taxpayers can earn £1,000/year tax-free and higher-rate taxpayers £500 with a savings account. What’s more, up to £85,000 per person is protected in UK-regulated financial institutions, meaning that your money will be safe if your bank goes bust.
You can even split your money across different savings accounts to get different benefits. But what kinds of savings accounts are there? And which would be best for you in 2019 and beyond?
Easy-access savings account
An easy-access savings account is similar to a regular bank account, as you can pay cash into them and withdraw whenever you want. However, you end up paying for this flexibility, with interest rates usually lower than on notice and fixed savings accounts.
- Recommended account: Marcus by Goldman Sachs
With a rate of 1.45% and unlimited withdrawals, the Marcus account from investment banking giant Goldman Sachs is best for those wanting to dip into their savings regularly.
Notice savings accounts
If you want to withdraw money from your savings at some point but don’t know exactly when, a notice account is your best bet. Some accounts will allow you immediate access to your funds, but typically charge an interest penalty for ‘breaking the rules’.
Notice savings accounts are recommended for first-time home buyers, as they can earn interest on their deposit before giving notice to withdraw before purchasing a property.
- Recommended account: United Trust Bank
The United Trust Bank’s 100-day account strikes the right balance between a solid interest rate of 1.7% and a relatively short notice period. Alternatives include the 180-day account from Market Harborough, which pays the very highest rate at 1.76%.
Seeing as most savings accounts are variable, some people prefer fixed-rate accounts (aka ‘fixed-rate bonds’), because they can get a guaranteed rate for a certain amount of time as well as better rates than easy access.
But there’s a catch… you can’t take your money out during that time. You won’t benefit from rate rises and can’t switch to another account either. Then again, you are protected from falling rates.
- Recommended account for one-year fixed savings: Metro Bank
Not only does Metro Bank lead the way with a guaranteed interest rate of 1.8%, it also has a relatively low minimum pay-in of £500 and can be opened online easily.
- Recommended account for two-year fixed savings: UBL UK
Although its a bit more difficult to open a UBL UK account (either in branch or by post), you’ll benefit from an interest rate of 2%. UBL UK is also best for three- and five-year fixed savings accounts.
“Whatever you choose to do, it’s important to go into fixed-rate savings with your eyes open and know the risks,” says Money Saving Expert’s Martin Lewis. “Of course, if rates don’t rise again in the short term and you pick well, you will earn more in a fix in the meantime.”