Savings accounts

Seeing your savings grow is a great comfort, however it is not always that easy. This is where we can help, our savings comparison can help you locate the best place to deposit your hard earned money. Savings accounts come in many forms. We have split them into seven groups; Internet, instant access, notice, savings bond, mini cash ISA, TESSA only ISA and child savings, and have provided an explanation of each type along with the highest rates available.

Internet Savings Accounts: Internet savings accounts offer better interest rates on average than high street savings accounts, the reason being that the overheads of setting up and administering the account are lower and the savings can therefore be passed on to you. Having an Internet savings account brings the convenience of being able to manage your savings whenever it suits you, 24 hours a day.

In addition to making an online transfer into your savings account, money can also be paid into the account through a standing order or by sending a cheque in the post.

Instant Access Savings Accounts: As the name suggests, instant access savings accounts give you immediate access to your savings, without incurring any penalties. Generally, instant access accounts will offer a lower rate of interest compared to accounts that require you to give notice before withdrawing money. However, if you shop around you will find that there are instant access savings accounts available that offer higher interest rates than the majority of notice savings accounts.

You can deposit lump sums or regular payments into your account. Interest is paid monthly or yearly and in some cases you will be able to choose.

Notice Savings Accounts: Notice savings accounts require you to give advanced notice to the bank that you wish to withdraw money from your account. If you do not provide sufficient notice then you will be penalised in the form of lost interest. Generally, notice accounts will offer a higher rate of interest compared to instant access accounts. Notice accounts will vary with regards to how many days notice you are required to give. Typical notice periods are 30, 60 and 90 days.

Fixed Rate Savings Bonds: Fixed rate savings bonds are investments that offer a guaranteed fixed interest rate for the term of the investment, which is typically 1, 2 or 5 years. The terms of the bond will state how money may be deposited, i.e. whether deposits can be made as a lump sum and/or on a regular basis.

You are required to keep your money invested for the full term of the bond in order to benefit from the higher interest rates offered. Withdrawals are not permitted.

Mini Cash ISA Accounts:
A Mini Cash ISA (Individual Savings Accounts) allows an investment of up to £3,000 a year and benefit from tax-free interest, but at the same time gives instant access to cash. They are only available to those over 16.

Two types of ISA are available: Mini and Maxi. A Maxi ISA allows you to invest up to £7,000 in stocks and shares within a tax year, with profits being free from capital gains tax. Once you have subscribed to a mini ISA you cannot subscribe to a maxi ISA in the same tax year, even if you cancel the mini ISA, and vice versa.

Mini cash ISAs come in different 'flavours', including internet, instant access and notice accounts.

Tessa Only ISA Accounts:
A TESSA, or 'Tax-Exempt Special Savings Account', is a five-year savings account that benefits from no tax deductions on the interest accrued. TESSAs were launched in January 1991 with new accounts being opened until 5 April 1999 when they were replaced by ISAs (Individual Savings Accounts). TESSAs are five year savings plans, with up to £3000 being invested in the first year and up to £1800 in each of the subsequent four years, to a maximum of £9000. All interest on a TESSA continues to be free of income tax, provided no capital and not more than 75 per cent of the interest is withdrawn until the end of the 5-year term.

Child Savings Accounts:
Child savings accounts are usually divided into accounts for children under 12 and those between 13 and 17, although the age ranges will vary. Child savings accounts for the under 12's often come with some form of welcome pack containing 'things to do' and special offers. Because children don't tend to have vast quantities of cash to save, most accounts can be opened with as little as £1.