Savings in the UK
Saving is a key part of money management. It can help you build up a pot for unexpected expenses and protect your income in retirement.
The value of your savings is protected by the Financial Services Compensation Scheme. This guide is also available in Welsh (Cymraeg). It explains how to open and manage UK savings accounts.
How to save
In the UK, Individual Savings Accounts (ISAs) and credit unions are popular places to store money. These accounts often have eye-catching interest rates, but can be restrictive in how much you can save or in what you can withdraw.
Other ways to save include using an app that lets you track your spending and savings, or setting up a monthly financial admin day to review and prioritise payments and bills. Avoiding unnecessary purchases and clearing high-interest debts before you start saving is also a good idea.
Other savings options include instant access accounts, which don’t pay the best interest but let you withdraw cash easily. Some savings accounts also require 32 or 95 days’ notice before you can use your funds, which can help prevent you from making impulsive purchases. Another option is to use a trust fund, where you name someone specific to receive the money when you die or leave the account. This can help with funeral expenses or other costs when you’re not around.
Tax-free savings accounts
Savings are one of the safest ways to invest. They are protected by the Financial Services Compensation Scheme – up to a limit of PS85,000 per person if the bank or building society you save with fails.
Depending on your income, you may pay tax on your interest. This is usually deducted at source via PAYE or through self assessment. If you think you’re paying too much tax on your savings income, it’s worth checking if you could claim back some of this.
If you want to earn tax-free interest, look for an ISA or a fixed rate bond. However, you will need to be prepared to lock your money away for longer periods. This is because you’ll only be able to make withdrawals if you have the account open for more than a year. This can be an important consideration for people who want to build up emergency funds or save for a major purchase.
Regular savings accounts
Regular savings accounts are a good choice for those who want to save a little and often, and can commit to depositing a set amount each month. They typically have a fixed term, and offer higher interest rates than current accounts or instant access savings accounts. For more details please visit SAVINGS UK
Some offer a bonus for those who meet their savings targets, while others are designed to encourage people on lower incomes to save, including through government schemes such as Help to Save. These accounts usually have restrictions on how you can use your savings and the number of withdrawals you can make.
As with all investments, your return will depend on the level of risk you take and the market conditions at the time. Some offer eye-catching interest rates, but it’s important to remember that you won’t earn the full rate for a year as you won’t be making a lump sum deposit from the outset. They also tend to have a maximum deposit limit.
Joint accounts
Joint accounts are a useful financial tool for married couples, couples living together and close friends. They allow account holders to pool money, work towards common financial objectives and share expenses and savings.
Typically, each person gets their own debit card, access to online banking and a chequing book. Some providers also offer a convenience account that lets you add an additional named person who can perform a range of pre-agreed actions, like paying bills, withdrawing cash and writing cheques.
If you want to open a joint savings account, all named account holders will need to pass the provider’s credit checks and meet any minimum balance requirements. You can apply for a joint savings account online or in branch and you will usually need to provide proof of identity and address. We’ve shown you those banks that allow either-to-sign joint accounts and those that require both account holders to authorise transactions. If you want to close a joint account, it will usually be necessary for all of the account holders to agree how to split the balance.
