How to work out which is the best savings account for you (with minimal hassle involved)

As with much in the world of personal finance, savings have been completely transformed over the past decade, with crashing interest rates and tech innovation meaning that the way we stash our cash now needs more consideration. The good news is that options for storing and growing your money are more abundant than ever — the bad news is that it can be difficult to decide which way to go.

Before we look at specific accounts, let’s think about different types of savings — because not all savings require the same sort of account, and it’s only by giving your savings a goal and a purpose that you’ll be able to figure out which account is best for you. So, before you read on, jot down what you want to save for, and how soon you’ll need the money.

Short-term or emergency savings

For short-term savings, like the money you’re putting aside for a new sofa, or something like an emergency fund which, by definition, requires instant access, you’ll probably want to use an account where you can withdraw the funds immediately. 

For quick withdrawals, the maximum interest rate you’ll be able to get at the time of writing is 0.7% with Cynergy Bank or saving accounts app Chip’s Allica Bank Account. This might not sound like much, but considering that many high street savings accounts have dropped their interest rates to 0.01%, these could be a much better option and will give you a little bit of a return on those savings — especially an emergency fund, which may remain untouched for quite some time, and contain a fairly substantial amount of money.

Medium-term savings

Despite the Bank of England Base Rate — which is what banks and lenders base their own interest rates on for both saving and borrowing — being at a very low percentage, it is possible to earn a little more interest – even up to 3% in some cases. This usually involves one or both of two things — depositing at regular intervals (usually monthly) and leaving the money untouched for a fixed term. 

These may also have a cap on how much of your capital (your saved money) you can earn interest on. For example, NatWest’s Digital Regular saver pays out 3.04% on balances up to £1,000, with a maximum monthly deposit of £50 — you can withdraw at any time, but in order to achieve the maximum interest payout, you could need to keep paying the £50 maximum into the account for 20 months. This is a good option for savings that you don’t want to invest, but which you won’t be needing for at least one to two years.

Long-term savings and investments

For savings that you’ll be leaving for at least three to five years, a stocks and shares ISA – where your money is invested in the stock market rather than staying in your account – could be a good option to beat inflation (currently on the rise) and make sure that your savings don’t lose value.