Top savings accounts & ISAs: The Uswitch guide

What is the top savings account? How to find the best ISA? We help you find the best instant access savings accounts, the best regular savings accounts, and the best online savings accounts for short-term savings, long-term savings and Individual Savings Account (ISAs).

Find the best savings account for you

There is a lot of choice when you are looking for the best savings account. First you need to decide how soon you will want your money. Are you looking for the best instant access savings accounts that will allow you to withdraw your money whenever you want?

Would you prefer a regular savings account which will get you into the savings habit and give you a higher rate of interest? Are you saving for the long term and looking for the best ISA rates? Or do you want to search for the best online savings bank accounts? Here is our guide on how to find the top savings accounts and how to choose the best ISA for you.

Read on to learn more about what to look for and compare the best Uswitch savings account interest rates.

What different sorts of savings accounts are available?

When it comes to saving your money, there is a lot of choice. There is a wide range of savings accounts available, depending on long you plan to save for, how quickly you will need your money, and what interest rate you are looking for. The best savings account for you depends on what sort of access you need to your money.

Here are the main options for top savings accounts – each type of savings product has different advantages and disadvantages:

An easy-access savings account allows you access to your money when you need it, so you can withdraw money as and when you like without notice or penalty. These accounts are also known as Instant Access savings accounts. The best savings rates are generally paid to online savings account accounts, although you can also find competitive rates on easy-access savings accounts run through a branch, by post or over the telephone.  

With internet and telephone savings accounts you can switch your money easily between your current and savings accounts, which can be useful if you need money in a hurry or you want a simple way to transfer into your savings account each month.

A fixed term savings account is another option and may be the best savings account for you if you are happy to tie your money up for 1, 2 or 3 years. Some providers let you take money out during the term if you need to, but you will lose interest if you do so. In return for tying up your money, you earn a fixed rate of savings interest over the term. These accounts often pay the best savings rate.

With a notice savings account you will have to give the bank or building society notice or warning - typically 1 to 3 months - that you want to take money out of your savings account. These accounts are good for people who want a reason not to dip into their account. Watch out for penalties if you do suddenly need access to your savings and remember, banks can change their interest rates so it is a good idea to compare the interest rate you are receiving with the best buy options on the market to ensure you are consistently getting the best rate.

With regular savings accounts, you are required to deposit a certain sum each month. Providers of these savings accounts normally specify a minimum and maximum deposit limit when you open the account. The downside is you cannot make lump sum deposits over and above your normal investment each month, and some providers limit the number of withdrawals you make. The upside is that these accounts can offer a good rate of interest. They also give you the discipline to save monthly over the period of 12 months, which can help you get into the savings habit and discourage you from dipping into your savings.

A Cash ISA, also known as a Cash Individual Savings Account, is a tax-free savings account. You can save money into your Cash ISA each tax year. The tax year runs for 12 months between April 6 and April 5 the following year. In the 2021 to 2022 tax year you are allowed to put up to £20,000 of your money into a Cash ISA, the same as the previous year.

Everyone aged 16 or over can have a cash ISA (but for some ISAs, usually with stocks and shares options, you must be 18). Otherwise, there is no age limit or preference to ISAs. You do not have to pay any tax on the interest that you earn on the money held within your ISA savings account.

Fixed-rate ISA accounts, which fix the interest rate for a set period of time, offer a higher interest rate than an instant access ISA but you cannot take money out of your account during the set period.

What do I need to consider when choosing a savings account?

When weighing up the various savings accounts on offer, bear these points in mind:

How will interest be calculated and paid on my savings account?

Savings accounts pay you an Annual Equivalent Rate (AER) on your credit. The rate indicates what the amount would be if interest was paid and compounded once a year. Compounding is when interest is added onto a deposit each month with the new interest based on the newly calculated deposit figure. The higher the AER, the more interest you'll earn on your money.

Bear in mind that you can earn up to £1,000 in interest without having to pay any tax, thanks to the Personal Savings Allowance (PSA). In the 2021 to 2022 tax year this allowance is £1,000 if you are a basic rate taxpayer.

In other words, you can earn up to £1,000 on your savings before you have to pay any tax. For higher rate taxpayers, the allowance falls to just £500 a year, and for those people who pay additional rate tax, the PSA falls to zero.

Glossary

AER This stands for Annual Equivalent Rate and tells you how much interest you will earn from your credited account over the course of one year.

Easy-access savings account An easy-access savings account allows you immediate access to your money without having to give any notice or pay any penalty. It is also sometimes known as an Instant Access savings account.

Gross interest This is the rate of interest before deduction of income tax.

ISA savings account An ISA savings account allows you to invest up to £20,000 each tax year without paying any tax on the interest on this money.

Net interest This is the rate of interest after the appropriate rate of income tax has been deducted.

Notice savings account A notice savings account requires you to give notice (typically one to 3 months) that you wish to withdraw your money.

Regular savings account A regular savings account requires you to save money on a regular basis by investing a set sum each month into the account.

Term savings account A term savings account (sometimes also called bond accounts) require you to tie your savings up for a specific period of time in return for a higher interest rate.

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