Created by: Dave Harland | 12 November 2019

How and why you should open a savings account

After the Bank of England increased the base rate to 0.75% in August 2018, a number of high-street banks started to increase their savings rates, meaning it’s a better time to open a savings account now than it has been for several years.

Recent figures show that saving account rates are at the highest they’ve been since 2012, averaging at 1%. This is 0.4% higher than the average rate offered by instant-access accounts.

What is a savings account?

A savings account is provided by the bank and allows you to keep your money safe. There are lots of different accounts out there but generally speaking, a savings account can help you grow your money by earning interest over a certain time.

How do I choose a savings account?

Before choosing a savings account, you should think about how long you’re looking to save for and whether you’ll need access to the funds.

  1. Start by visiting your local bank or building society and explain your financial needs.
  2. Compare competitors and interest rates.
  3. Ask about any additional fees and hidden terms and conditions.
  4. Open your account online or in branch.

Why should I open a savings account?

  • Having your money in a bank instead of a piggy bank provides an extra level of protection.
  • You could increase your money by earning interest.
  • Savings can be used in times of need and could stop you going into debt during an expensive crisis.
  • Having a savings account can help you to become more aware of your spending and financial situation.

Thinks to keep an eye out for

  • If you’re opening a savings account, you’ll probably want the highest savings rate but watch out for short-term high rates that end after the first 12 months. 
  • Many savings accounts come with a minimum investment limit, but plenty can be opened with just £1. 
  • Some accounts have limits on how much you can pay in during a certain period. 
  • Once you’ve opened a savings account, you could set up a direct debit for a certain amount every month to help you automatically save.  

Whether you’ve got short-term savings goal, long-term plans, want some protection for a rainy day, or help you for life’s unexpected events, savings account interest rates look like they’re on the up.

Savings account Save money