The right savings account depends less on the headline rate and more on when you might need your money.
Summary
- Easy-access accounts let you withdraw at any time, but their rates can change.
- Fixed-rate accounts, often called fixed-rate bonds, lock in a rate for a set term but restrict access.
- Notice accounts sit in between: you give notice before withdrawing.
- Interest above your personal allowances can be taxable, so ISAs are worth considering.
Savings accounts come in three main shapes: easy access, notice and fixed rate. The trade-off is simple to state but easy to get wrong: the more flexibility you give up, the more certainty you usually get about the rate.
How they compare
| Feature | Easy access | Notice | Fixed rate |
|---|---|---|---|
| Withdrawals | Any time | After a notice period | Usually not until the term ends |
| Interest rate | Variable | Usually variable | Fixed for the term |
| Adding money | Usually any time | Usually any time | Often only when opening |
| Best for | Emergency funds, short-term goals | Money you can plan around | Money you won’t need for a set time |
Easy-access accounts
- Ideal for an emergency fund or money you may need soon.
- Rates can go up or down, sometimes with little notice.
- Some accounts limit the number of withdrawals per year; read the terms.
Notice accounts
- You give notice, such as 30, 60 or 90 days, before withdrawing.
- They can suit money you won’t need urgently but want to keep flexible.
- Rates are usually variable, so check whether they’re still competitive over time.
Fixed-rate accounts
- You lock your money away for a set term, often one to five years.
- The rate stays the same for the whole term.
- Early access is often not allowed, or comes with a penalty.
Take care
Only fix money you’re confident you won’t need. If an emergency comes up, a fixed-rate account may not let you reach your savings in time.
Tax on savings interest
- Many people can earn some interest tax-free through the Personal Savings Allowance.
- Interest earned inside an ISA is tax-free and doesn’t use up that allowance. See our guide to ISAs.
- If interest is taxable, HMRC usually collects it through your tax code or Self Assessment.
Top tip
Keep a few months of essential spending in an easy-access account before fixing any savings. That way a surprise bill won’t force you to break a fixed-rate deal.
Check the protection
Savings with UK-authorised banks and building societies are protected by the FSCS up to its limit per firm. Our guide to FSCS protection explains how the limit works.
How to choose
- Need access any time? Easy access.
- Can plan withdrawals in advance? A notice account.
- Won’t need the money for a while and want certainty? A fixed rate.
Many savers use a mix: easy access for emergencies, then fixed rates for money set aside for a later date. Premium Bonds are another option some people hold alongside interest-paying accounts.
Questions readers ask
Can I withdraw early from a fixed-rate account?
Often you can’t withdraw before the term ends. Where early access is allowed, there’s usually a penalty, such as losing some interest.
What happens when a fixed-rate account matures?
Your provider will contact you before the end of the term. If you don’t act, the money is often moved to an easy-access account, which may pay a lower rate.
Is interest on savings taxed?
It can be. Many people can earn some interest tax-free through the Personal Savings Allowance and other allowances, and interest in an ISA is tax-free. GOV.UK explains the current rules.
This guide is general information, not financial advice. Rules, rates and allowances can change, so check the latest details with the provider, GOV.UK or the Financial Conduct Authority before making decisions. For advice on your own circumstances, speak to an FCA-authorised financial adviser.