Online Savings Account?
These days many of the best savings rates available are from online savings accounts. This is because it is cheaper for banks and building societies to offer an online savings account than it is to produce passbooks and run a branch-based one. There really are very few reasons to choose a branch-based or postal account these days. If you are worried about the security of an online savings account then consider a branch based one.
Compare instant access savings accounts
What Does AER mean?
AER stands for Annual Equivalent Rate. This shows what the interest rate would be if interest was paid and added to your account annually. This allows you to compare the interest rates of savings accounts that pay interest on a monthly basis with those that pay it annually.
See our Notice and Fixed Rate account recommendations
Will my Savings Interest be Taxed?
The banks and building societies pay your savings interest net of basic rate (20%) income tax automatically. If you are a non-taxpayer then you will need to apply to have your interest paid gross of tax by completing and returning Inland Revenue form R85. Your bank, building society or tax office can help you with this. If you are a higher rate taxpayer then you will need to declare the interest you have earned to the Inland Revenue on your self-assessment form. They will then ask you to pay the difference you owe.
Shelter your savings from the taxman with a Mini Cash ISA
How Often Will Interest be Paid?
Check that savings accounts calculate interest on a daily basis in order to take maximum advantage of compounding over time. It is less important how often interest is actually credited to your account – unless you rely on that interest as part of your income. If interest from your savings does form part of your income then choosing an account that pays interest on a monthly basis may suit your needs best.
Get higher interest rates with a Regular Savings account
What Protection Does my Money Have?
In the unlikely event that the bank or building society holding your savings goes bust or is unable to return your money to you, you have access to the Financial Services Compensation Scheme (FSCS). However, the maximum compensation you can receive from the FSCS is limited to £31,700 (100% of the first £2,000 of your savings and 90% of the next £33,000). Click here for more information on the FSCS.
Start your kids off on the savings habit
