If you are looking for a place to accumulate cash in the UK, you have a number of different options. You might be looking for a regular savings account at a bank or building society, or you could choose to make a different investment and hope to get a good return. Because of the wide range of choices, I thought it might be helpful for you if I listed a few options that you could consider. Of course, you can find many more by doing further research online (the Money Advice Service is a good place to start).
When you go to your bank or building society to discuss savings accounts, there will likely be a number of different types. Here are a few common ones you might come across:
Instant access – these accounts allow you to add or remove funds whenever you like. The downside can often be a lower interest rate, but they can be useful if you know you’ll need to be spending regularly.
Limited access – unlike instant access, a limited access account can give you a higher rate of interest. However you will need to agree with your provider that you won’t need to get immediate or unlimited access to your savings.
Cash ISAs – this is a form of savings account where you can earn interest tax free. There are limits for how much you can save in an ISA allowance; currently this stands at £11,520 for 2013/2014, and £5,760 of this can be through your cash ISA. If you withdraw funds from your ISA you won’t be able to top it up again; once you’ve put money in the account the first time, this is what counts towards your ISA limit.
Fixed term – there are some savings accounts that will require you to lock away your money for a specific amount of time; if you are able to do this you could get a higher savings rate.
Christmas savings schemes
A completely different form of saving is a Christmas scheme. The idea is that you save up small amounts throughout the year so you can afford your Christmas shopping. There are a number of schemes like this in the UK, offered by the Post Office, national retailers, etc. It’s worth noting that once you put your money into the scheme, it will be locked in until November or December when you’ll get all your savings back in the form of gift vouchers or cards. Another thing to keep in mind is that most Christmas saving schemes don’t give you any interest back so you could actually make more by finding an alternative, however it does give you the power to budget more effectively.
A unique way of saving money can actually come through lending it. There are some providers in the UK (have a look online) who will lend out your money to responsible borrowers. You could earn a higher amount of interest than a normal savings account due to the associated risk of the investment, but I’ve heard a number of people advocating this form of saving.