Which savings account is right one for you?
Advice from Newbury Building Society on the range of products available
NAVIGATING the variety of savings accounts available can be time-consuming and confusing, writes Luke Pummell from Newbury Building Society.
From easy access to fixed rate bonds, it can be difficult to unpick the jargon and understand which will help you achieve your goals.
Here are some of the different accounts you may come across on your search for a home for your savings.
1. For the rainy day saver: Easy access savings accounts (sometimes called instant access)
Easy access savings accounts do what they say on the tin – they allow you to access your money at any time, providing reassurance that it’s there when you need it.
However, this usually means you should expect a lower interest rate than a limited access or fixed rate account.
2. Saving for a one-off purchase: Regular savings accounts
Also known as ‘regular savings account’ or ‘monthly savers’, these accounts require you to deposit an amount each month, potentially with limited withdrawals.
In return, you’re usually given a higher interest rate than an easy access account.
If you don’t want to invest a lump sum but want to get into the habit of regular saving, particularly if you’re planning for a one-off purchase, this type of account could be an option.
3. If you don’t need to touch
your savings: Fixed rate accounts and restricted access
Fixed-rate bonds accounts tie up your money for a length of time while your fixed rate interest is accumulated.
Such accounts can extend over one and two years with some banks and building societies offering up to five-year fixed bonds.
The rule of thumb is the longer you are willing to lock your money away, the higher your return.
However, by doing so, you give up the right to access your money for the agreed timeframe.
You might be allowed to withdraw your funds in an emergency, but you should be prepared to pay a fee.
Restricted access accounts can offer you some degree of access, for example, after 30, 60 or 90 days, but you could pay a penalty if you require access sooner. Usually these accounts are priced higher than easy access accounts.
4. If you want to maximise your tax efficiency ISAs
The rule of thumb is the longer you are willing to lock your money away, the higher your return
Individual Savings Accounts (ISA) can help you to make the most of your money.
The interest is free from tax, so all the interest you earn, you keep.
There’s a limit to how much cash you can deposit – for the tax year starting April 6, 2022, the allowance is £20,000 for cash or Stocks and Shares ISAs*.
Remember: When you’re researching savings accounts, check the terms and conditions and product information to make sure you are eligible.
If you have questions about Newbury Building Society’s savings accounts, or would like to open one, visit your local branch or book an appointment on our website.
A full list of savings accounts can be found at www. newbury.co.uk
*All figures and data correct as of July 2022. n Luke Pummell is the direct sales manager at Newbury Building Society.