TSB won Best Investment Platform for Beginners at the YourMoney.com Personal Finance Awards 2024, one of two awards the banking giant won at the event.
As part of YourMoney.com‘s special award winner spotlight series, Peter Hatton head of savings at TSB, explains what types of savings accounts are out there.
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We all know that it’s a good idea to put any spare cash ‘into savings’ but, like TSB, most banks and building societies offer a range of different savings accounts and products that cater for different needs.
So, before you make a choice about where your cash should go, it’s worth considering:
· Will you need to access the money any time soon, or can you lock it away?
· Do you want regular interest payments or are you happy to get one payment annually or when the product ends?
· Do you want to make sure that you don’t pay tax on any interest that you earn?
Once you know the answer to these questions, you’ll find it easier to choose between different accounts. Also remember that if you’re prepared to lock your money away, you’re likely to earn more interest.
Instant-access accounts
Instant savings accounts allow you to pay in and take out money whenever you want. You’ll still earn interest, but it will typically be less than accounts that don’t offer this flexibility. You may not even need to open a new account – many banks include simple instant-access accounts like our ‘Savings Pots’ in their banking app.
Fixed bonds
With a fixed bond, your money earns a fixed rate of interest that won’t change but is tied up for a set period, usually between one and three years. Although you can’t withdraw it, you will earn a guaranteed interest rate, which is often higher than an instant-access account. Fixing your savings rate might be attractive when savings rates are expected to fall.
Limited access accounts
These offer more flexibility than bonds and usually better rates of interest than instant access. Depending on the account you might be allowed two or three withdrawals per year, or you might get lower interest paid on your savings in the months when you take money out. But they’re a great option if you think you might occasionally need to dip into your savings.
Regular savers
Regular savers are good if you know that you can afford to save a set amount each month, although there will usually be a limit to how much you can pay in. They typically offer some of the highest rates of interest, but with interest paid monthly, you’ll only earn interest on what you have saved up to that point.
Individual savings accounts (ISAs)
ISAs come in different forms, including instant-access and fixed term, but the key thing to remember is that while you are limited to saving up to £20,000 in each tax year, all the interest you earn is free from tax.
Monthly interest: if you want regular payments from your savings, check whether the interest is paid monthly. Some accounts also offer the ability for interest to be paid into a separate account, such as a current account, so you can use it as a form of income.
Finally, don’t forget that for many accounts, the rate of interest will fall once the term of the product ends. Your savings provider will notify you of this in advance so, to maximise your return, make sure you’re ready to take action when the term ends.
TSB is a retail bank with a trusted customer brand, heritage stretching back to the start of the savings bank movement 200 years ago, and a committed workforce that offer full service banking to more than five million customers. It operates on a modern banking platform and serve our customers through digital channels, over the phone and in branches across the UK.
