How to choose the right savings account for you
By Stella Demades, Product Director at OakNorth Bank
I recently shared a mini-guide on ISAs (interest savings accounts) and off the back of it, we’ve had a number of people getting in touch asking if I could write a blog providing some clarification on the different types of regular savings accounts too.
The first thing to note is that there are several different types of savings accounts – fixed term, easy access, and notice accounts. At OakNorth Bank, we offer all three, but choosing the right one for you will depend on several factors.
Fixed: These savings accounts have lots of different names – fixed-term, fixed-rate, fixed bond, etc. but they all mean the same thing. With these products, you put your money away for a fixed period of time (term) in return for a fixed amount of interest on your cash, and you won’t be able to access your money for the duration of the term. You also typically can’t “top-up” your account and deposit more money into it during the term. As such, these products tend to be some of the most competitive in the market, generally offering higher interest rates than easy-access or notice accounts. The longer you’re willing to lock your money away, the better the rate will likely be. For example, at OakNorth Bank, we have fixed-term savings accounts ranging from six months up to 60 months, with the latter paying the highest rate of interest of any of our products. These types of accounts are perfect for savers who know they won’t be needing access to that cash for an extended period – e.g. because they’re saving for a house, university fees, etc. Please note that our fixed term savings accounts are different to fixed-rate ISAs where customers can withdraw their funds during the term but will have to pay a penalty. You are not able to do this with fixed-term savings accounts.
Easy access: As the name suggests, easy access savings accounts give you “easy access” to your money whenever you like, without having to pay any penalties or forfeit any interest. However, because of this, the rates tend not to be as competitive and are variable, so these products are better for those who want the flexibility of being able to access their cash, but still want to be making some interest on it in the short term.
Notice: Notice accounts are the savings products that fall in between fixed and easy access accounts – they require you to give your bank notice before you can withdraw your funds. For example, at OakNorth Bank, we require 35 days’ notice. These products typically pay variable rates of interest and tend to pay higher rates than easy access accounts, you can also “top-up” your account and deposit more money into it during the term. They’re a good fit for those who may be saving for a holiday, a car, etc. and want to earn a higher interest rate than what’s available with easy access, but who also want the flexibility to access their money should their plans change.
Once you’ve decided what kind of product you want, you then need to decide which provider to choose. This will again, depend on several factors such as – what kind of rates they offer; whether your money is protected by the Financial Services Compensation Scheme (FSCS); How you can open, fund and manage the account; What their customer service is like. This and other information can be found online and in the best-buy tables of national newspapers.
At OakNorth Bank, we offer competitive rates, FSCS-protection, the ability to manage your money both online and via our mobile app, and we’re proud to have a 4.7-star Feefo rating. If you think OakNorth Bank might be right for you, please check out our savings products here.