What Is A Savings Account?

A savings account is an account which enables the holder to accumulate funds for use at a different time. This money can usually be withdrawn by the account holder or an appointed person, the period of notice that you need to give in order to withdraw money from your savings account will depend on the type of savings account that you have. There are many types of savings account, here at ZeroPercentInterest.com we hope that we will be able to help you find the right one for you.

Easy Access Savings Account Or No Notice Accounts

An easy access savings account enables you to withdraw funds from your bank account with little or no waiting period. These types of account, also sometimes called no notice savings accounts, usually offer a lower interest rate to compensate for the ease of access to your savings.

An easy access savings account may be better suited to people who are just starting to save money but may need to withdraw some of their savings at short notice. The accounts can usually be opened with as little as £1.

Notice Savings Accounts

As the name would suggest, a notice savings account would require that in order for you to withdraw your money penalty free you have to give the bank warning or notice that you want some money from your account in a number of days. The number of days notice you will have to give will depend upon the notice savings account itself, but usually ranges between seven and 120 days, with the most common periods being 30 or 60 days.

There are several benefits that may be gained from a notice savings account, primarily, the interest rate is usually higher which gives you a better return on your savings. Also it discourages you from dipping into your savings on a whim because you cannot get the money out as easily (the plasma TV may have to wait a bit).

A notice savings account therefore may suit individuals where there is more disposable income each month. Money can sometimes be taken out at short notice in emergencies, but usually this will come with some form of penalty, usually this is an interest penalty of some kind.

Regular Savings Accounts

A regular savings account, as the name implies, is a savings account into which you deposit a predetermined amount each month. The amount is usually determined by the account provider and may be given as a minimum and maximum that you can deposit each month. This sort of account does not usually allow you do deposit any further random lump sums into the account.

Depending on the provider, you may find that restrictions are placed upon the number of monthly withdrawals. This type of account may be suited to people who want to see their savings grow quickly.

Term Or Bond Savings Accounts

A term or bond savings account will usually give you a fixed interest rate for investing your money for a set period of time, or term. A term or bond savings account will usually require that you invest a significant amount of cash at the beginning and then keep it in for the full term which could be as long as five years.

For this reason, these accounts are usually for people who want a maximum return for a minimum risk. You cannot usually add to a term or bond savings account once it has been started.

Cash ISA

A cash ISA works exactly the same as if you were depositing your money into a building society savings account. the difference is that you will not pay tax on your interest payments as it is a tax free account up to a maximum savings limit of £3000 per year.

Children's Savings Accounts

Essentially these are the same as adults savings accounts with the exception that before the age of seven, the account must be opened by the parent or guardian of the child with the child's initials attached. Over this age and the account can be opened in the name of the child only.

Like adults, children's savings will be subject to tax on the interest if the amount goes over the allowed taxable income for the child. The parent maybe responsible for the tax on interest if the savings generate interest of more than £100 per year.