Top up your savings with some interest while still keeping full control of your money.
An easy access savings account does what it says on the tin. They’re a nice way to separate your savings from your day-to-day finances, earn some interest and still be able to access the money if you need it.
Even the top-paying easy access savings accounts will hardly beat inflation these days, so don’t expect rates that will make your mouth water (not going to happen). But easy access savings accounts can still make a solid, risk-free way to boost your savings.
What are easy access savings accounts?
The name is pretty self-explanatory. They’re savings accounts, so they’re a place to keep your savings, not to have your salary paid in or to manage your day-to-day finances.
“Easy access” means that, unlike with fixed-rate savings accounts, you can send your money back to your current account at any point if you need it.
How do easy access savings accounts work?
They work in a fairly straightforward way. Here’s more or less what your journey with an easy access savings account should look like:
- Application. You can usually apply online by providing your personal details and going through an ID check. If you already have an account with the financial institution you’re considering, you may be able to apply from the app.
- Deposits. You can normally deposit as much as you like, whenever you like. If you’d like to save a fixed sum every month, you can set up a standing order from your current account, and your bank will move the money automatically for you.
- Interest. It can be paid monthly or annually.
- Withdrawals. By definition, an easy access savings account should allow you to transfer the money back to your current account anytime and then use it as you like.
- End of a deal. Unlike fixed-rate bonds, easy access savings accounts don’t mature or expire. However, they might offer introductory interest rates that then revolve to a much worse deal after a set period of time (like a year). If that’s the case, put an alarm on your calendar so that you don’t forget to compare easy access accounts again and potentially open one with another institution.
Should I get an easy access savings account?
That depends. When it comes to making your savings profitable, you have a scale of options, from the safest to the riskiest The safest are current accounts and easy access savings accounts (your money is safe and you can withdraw it when you need it) followed by notice savings accounts (you can withdraw your money freely but you need to notify your bank in advance) and then fixed-rate bonds (your capital is safe but you can’t access it until the product matures). The riskiest option is an investment (capital is at risk and you may get back less than you invested).
Easy access savings accounts are risk-free, but this also means the returns won’t be stellar. Thus, an easy access savings account is a good choice in the following situations:
- The idea of investing your savings fills you with dread. Fair enough, investment can be risky, complicated and time-consuming.
- You think you may need your savings at some point in the near future. If you’re 100% sure you won’t, have a look at fixed-rate bonds instead since they normally come with better rates.
- You’d rather keep your savings separate from your day-to-day finances. In general, having a dedicated account for your savings takes away (some of) the temptation to spend them.
- Your current account doesn’t pay an interest rate (or you’ve reached the maximum limit). Some current accounts (although not many) pay an interest on balances up to a certain figure, which in some cases may be better than those offered by easy access savings accounts. It’s worth considering this option, but if your current account doesn’t pay any interest and you don’t want to switch, or if it only pays interest for the first few thousand pounds (that’s usually the case) and you’ve already reached the limit, an easy access savings account is definitely the next option to look at.
How to compare easy access savings accounts
Unlike most financial products, easy access savings accounts are not complicated to compare. Yay. Basically, you just need to do the following:
- Look at the interest rate. Guess what? You need to look for the highest rate available.
- Check the eligibility criteria. Some banks only offer savings accounts to existing customers. Moreover, while some easy access savings accounts can be opened with as little as £1, others require a more conspicuous minimum deposit, so they’re not suitable for savers who are just starting their journey.
- Make sure withdrawals aren’t limited (or that you’re okay with it if they are). Some easy access savings accounts aren’t fully easy access, but will limit the number of times you can withdraw money from the account every year. Make sure you’re aware of it if that’s the case.
Are easy access savings accounts safe?
Yes, just double-check that the deal you’re looking at is FSCS-protected (all the savings accounts with major financial institutions will be). The Financial Services Compensation Scheme protects your deposits up to £85,000 and would refund you if something were to happen to your savings account provider.
If you have more than £85,000, it’s better to spread your savings between different accounts to secure full protection.