We outline the most popular accounts. Our guides provide more details and there is also more information available on various different types of account.
Cash ISAs
If you pay tax, your first port of call should be an ISA (Individual Savings Accounts). These work just like other accounts, except returns are tax-free. So it’s usually worth using up your ISA allowance every year, before you start saving cash elsewhere.
The maximum you can save into a cash ISA this tax year is £5,340. (You can save the same amount into a stocks and shares ISA.) Alternatively, you can invest your full £10,680 allowance in just a stocks and shares ISA.
You can find out more in our ISA guides. You can take money out of your cash ISA when you want, unless you choose an account with restrictions.
The other types of accounts below are open to you whether you are wrapping up your rainy day fund in an ISA or not.
Easy access accounts
Also known as instant access accounts, these allow you to save what you can, when you can and take it out again whenever you want, usually without paying a penalty.
The flexibility of an easy access account makes it good for people who can’t commit to saving regularly. On the downside, these accounts usually offer lower rates of interest than most of the alternatives and since the rates are variable they can change at a moment's notice. Some even have restrictions on the number of withdrawals you can make.
Regular savings accounts
With a regular savings account, you commit to paying in a set amount of money every month in return for higher fixed rates of interest. But if you miss a month, or try to make a withdrawal before the end of the account’s term, you’re likely to be penalised.
Fixed rate bonds
As the name suggests, these saving accounts usually offer a decent, guaranteed rate of interest lasting the full term of the bond - typically between one and five years. They are usually totally inflexible so if you try to withdraw your money or make further deposits during a bond’s term, you may lose interest or the bond could even be closed.
The next step
You can compare accounts - and find the one that’s best for you – by going to our best deals.
We also have a list of the top-paying current accounts.
And if you’d like to improve other aspects of your personal finances, the We Know Money family also includes guides, tips, information and best buys on a range of other money services.
For Further information relating to accounts please visit Wikipedia .
