The different types of savings account

Whether you’re able to save a few pounds or a few hundred each month, where you decide to save your money is important. But knowing which provider and product to opt for can be confusing.

Discover the different types of savings account

That’s why we’ve put together a quick, one-minute quiz to help you pick the best type of savings account for your circumstances. Simply follow the questions through to the end to reveal a list of products to consider. This is only a guide and there are exceptions to every rule, but it’s a helpful starting point.

After you’ve completed the quiz, there will be suggested, helpful resources so you can learn more about the different types of savings accounts. Lots of factors can influence the type of product you need. From how regularly you want to save, to how much you plan to put aside. You should also think about whether you need access to your cash, and what accounts you may already have.

What’s the personal savings allowance?

An important factor in deciding where to place your savings is your personal savings allowance (PSA). Your PSA is a tax-free allowance that allows you to earn interest on your savings without paying tax on that interest.

Your PSA will depend on the type of taxpayer you are. If you’re a basic rate (20%) taxpayer, you’ll be eligible for the personal savings allowance of £1,000 in 2024/25. That means you can earn up to £1,000 a year in interest without having to pay any tax. If you’re a higher rate taxpayer (40%), this limit is £500. If you’re an additional tax rate (45%) payer, unfortunately, you don’t get any allowance.

Other things to remember about different savings accounts

You don’t have to open a savings account with your existing current account provider. Review the whole of the market to find which product is best for you, even if you get a savings account that’s automatically set up when you open your current account.

Some savings accounts have a limit of how much you can save each month. If you want to save more than this on a regular basis, check the conditions of the account before you sign up.

If you’re planning on saving more than £85,000, spread your savings across providers to be protected by the Financial Services Compensation Scheme (FSCS). The FSCS is a UK compensation scheme for customers of UK authorised financial services firms. The FSCS can step in to pay compensation if a company is unable, or likely to be unable, to pay claims against it.

If you want to know more about the potential financial impact of any savings account, a financial or wealth advisor may be able to help with projections and detailed analysis.