Instant access savings accounts

These are accounts that pay interest and allow you to withdraw money whenever you need it. You can save as little or as much as you want each month. You can often open an account with an initial deposit of as little as £1.

Are instant access savings accounts for you?

Instant access savings accounts are for you if you have spare cash and want to:

  • earn a better return than from your current account
  • save at your own pace
  • be able to withdraw money whenever you want
  • not take risks with your money.

Risk and return

  • They usually offer higher interest rates than current accounts.
  • The interest rate isn’t as high as with regular savings accounts or savings bonds, which would lock your money in.
  • Your savings won’t hold their buying value in the long run if the interest rate on the account is less than the rise in the cost of living (inflation).

How safe are your savings?

Cash you put into UK authorised banks, building societies or credit unions is protected by the Financial Services Compensation Scheme (FSCS).

The FSCS savings protection limit is £85,000 (or £170,000 for joint accounts) per authorised firm.

It’s worth noting that some banking brands are part of the same authorised firm.

If you have more than the limit within the same bank, or authorised firm, it’s a good idea to move the excess to make sure your money is protected.

How to open an instant or easy access savings account

You can open an instant or easy access account directly with a bank or building society. Most of them will let you open an account:

  • online
  • over the phone, or
  • by going into a branch.

You might need to have a current account with your bank or building society to open an instant access savings account. Check with them before you get started.

Tax on your savings

Most people need to pay Income Tax on the interest they receive, so basic rate tax is normally deducted as a matter of course from savings account interest.

If you’re a basic-rate taxpayer, you have a personal savings allowance of £1,000. This means your first £1,000 of savings income is tax-free.

Higher-rate taxpayers benefit from a smaller personal savings allowance of £500.

If you’re a non-taxpayer, you can ask for interest to be paid without any tax deductions.

If things go wrong

If you’re unhappy with the service from your bank or building society, you can complain to the Financial Ombudsman if you can’t resolve the problem directly.

Choosing a savings account

Comparison websites are a good starting point for anyone trying to find a savings account tailored to your needs.

Comparison websites won’t all give you the same results. So make sure you use more than one site before deciding.

It’s also important to do some research into the type of product and features you need before making a purchase or changing provider.

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MoneyHelper is the new, easy way to get clear, free,
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Whatever your circumstances or plans, move forward with MoneyHelper.

Continue to website
Looking for us? Now, we’re MoneyHelper

MoneyHelper is the new, easy way to get clear, free,
impartial help for all your money and pension choices.
Whatever your circumstances or plans, move forward with MoneyHelper.

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