How to start saving

Maximise your interest from every penny

Want to start saving but don't know where to put your money? In this guide we explore all the different savings options to help you decide which accounts might be best for you.

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Four key points before you start saving

There are a few crucial things to check before you put your hard earned cash in a savings account – if any of the below apply to you, you'll be much better off by starting there.

  • The interest you pay on debts – such as credit cards, loans, overdrafts and store cards – is often MUCH higher than the interest earned on savings. So by paying off your debts with your savings, you'll usually be better off – see Repay debts or save?

    Overpaying your mortgage can also lead to massive savings, as by doing so, you'll pay it off sooner and potentially save a fortune in interest payments. However, it's much more complex than with the other types of debt above, so see Should I overpay my mortgage? for full info.

  • The Help to Save scheme gives low-income earners claiming universal credit or working tax credit a savings boost. It pays a 50% bonus on the amount saved, up to a maximum of £1,200 over four years. You could be eligible if you're unemployed, have been made redundant, are off work due to sickness, or are in work on a low income (including if you're self-employed).

    If you're unsure, first check to see if you're entitled to universal credit and/or tax credits.

  • Anyone aged 18 to 39 can open a Lifetime ISA (LISA) and save up to £4,000 per tax year into it, either as a lump sum or by putting cash in when they can. The state then adds a 25% bonus on top. So save £1,000 and you'll have £1,250, and save the full £4,000 and you'll have £5,000.

    First-time buyers can use the money and bonus towards the deposit for any residential property costing up to £450,000 once they've held the LISA for 12 months. It can also be used for later-life saving – but be careful, as for most, saving in a pension is likely to be more lucrative.

  • There are two types of accounts to consider here – standard children's savings accounts and junior cash ISAs (JISAs). Children's savings accounts pay slightly higher rates and let you access what you save, but usually only let you save small amounts. With Junior ISAs, everything you save into it is locked away until the child turns 18 – though you can put up to £9,000/year into it and all interest earned is tax-free.

    While the tax-free element can be useful for some, most savers don't pay tax on their savings interest due to the personal savings allowance (PSA) – it allows basic-rate taxpayers to earn £1,000 in savings interest tax-free (£500 for higher-rate taxpayers). So unless you're exceeding your PSA – or want what you save to be locked away – you're likely better off with a standard children's savings account.

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Top places to save money

If none of the above options apply to you, don't worry – here we cover some more general savings options. The aim is to earn as much interest as possible from the money you save, though it's not always as simple as just choosing the accounts which pay the highest rates – it depends on how much you have to save, and whether or not you want regular access.


We've assumed your combined savings won't exceed £85,000 – if they do then you should consider spreading your savings across multiple banks. This is because the Financial Services Compensation Scheme (FSCS) only protects up to £85,000 per person, per financial institution (£170,000 for joint accounts) – see Are your savings safe? for full info.

Step 1: Choose a main savings account

A main savings account is the default place to pay your savings into. These accounts let you access your cash whenever you like, as often as you like. The idea is to make sure you're always earning interest on your savings as soon as possible – though you can boost the interest you earn by syphoning some (or all) of your savings from these accounts to various other types of savings accounts, either monthly or as lump sums (more on this in step two).

There are two main options here:

1. Easy-access savings. The foundation of traditional savings

Easy-access accounts are your bog-standard savings accounts – they pay lower rates than some of the options below, but they allow you to make deposits and withdrawals whenever you want. The rates here are the MINIMUM that you should be getting.

2. Easy-access ISAs. Interest you earn is tax-free – useful if you've a lot of savings or are an additional-rate taxpayer

The personal savings allowance (PSA) allows basic-rate taxpayers to earn £1,000/year of savings interest tax-free (£500/year for higher-rate, nowt for additional-rate). If you're likely to earn interest over the PSA, or are an additional-rate taxpayer, then it's worth considering an easy-access cash ISA instead – as the interest earned is always tax-free.

However, ISA rates are usually lower than for standard savings – if they're significantly lower then you may be better off with standard savings, despite having to pay tax. To check if a higher-paying savings account wins versus an ISA, see how to compare savings with ISAs.

P.S. If you're only planning to save a small amount, you may want to forgo these easy-access accounts and opt for one of the higher-paying accounts below instead.

Step 2: Boost the interest you earn

The below accounts all pay higher rates than the easy-access options above, though they're less flexible – some only let you save a small amount or require you to save monthly, while others lock your cash away for a set period of time, preventing you from accessing it. Yet they are still a great option for many, despite these restrictions.

1. Bank accounts. Pay higher rates than standard savings & offer easy-access, though usually have low limits on how much can be saved & require you to jump through some hoops

Bizarrely, some standard bank accounts actually pay more than traditional savings accounts. While lucrative, they can be a bit of a faff – you may be required to pay in a certain amount each month (often £800+), pay out a couple of direct debits, or only be able to save a small amount into them (for example, Nationwide's max limit is £1,500, Virgin Money's is £1,000).

Some banks even pay you hundreds to switch your existing account to them. And you can even switch multiple times and earn potentially £1,000s – full info in Multiple bank switching.

2. Regular savings accounts. Put a small sum of money aside on a monthly basis into some of the highest-paying accounts out there

Regular savings accounts pay some of the highest rates it's possible to get, though you can only pay small amounts into them each month (usually between £50 and £300). They work best when coupled with one of the easy-access savings or bank accounts mentioned above. Here you want to pay as much of your monthly savings as you can into a regular savings account (ideally up to its maximum limit), keeping your surplus in the next-best paying account.

Many regular savings accounts allow you to withdraw your cash whenever you want, though not all do – so be sure to check before you apply if this is important to you. It's also worth noting that the very best interest rates are often reserved for existing customers or require you to have certain current accounts – though there are still decent rates out there that are available to all.

P.S. If you've lots of savings, you can open multiple regular savings accounts and drip-feed your savings into them.

3. Fixed-term savings. Pay some of the highest rates, but your savings are locked away

As with easy-access accounts above, there's again a choice of fixed-term savings accounts and fixed-term ISAs. The same logic applies as before – only go for an ISA if you need the tax benefits – though if ISA rates are much lower then you may still be better off with standard savings, despite paying tax.

Both of these fixed-term options pay higher rates than their easy-access counterparts, but here your savings are locked away for a set period of time (often between one and five years). This means you don't have on-demand access to your cash.

We know it's important for many to be able to access their savings easily, so only go for these if you're sure you won't need your savings during the term.

It's also worth pointing out that you can usually access your money early in a fixed-term ISA – if you're willing to pay a hefty interest penalty. In contrast, with a fixed-term savings account, once you put your cash in, it's locked away for good until the end of the term.

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Savings accounts FAQs

Here are some common savings account related queries. If you've got a question we've not answered below or in the text above, suggest a question in the MSE Forum.

  • Are my savings safe?

    All of the banks and building societies we list in our various banking and savings guides are fully UK-regulated, meaning you get £85,000 per person protection in the event one of them goes bust (£170,000 for joint accounts). 

    The only thing to watch out for is that some banks are linked to others, meaning this protection is shared – see Are your savings safe? for full info.

  • Can I save in my partner's name if they pay tax at a lower rate than me?

    If you're in a couple and one of you pays tax at a higher rate then, providing you trust each other, putting non-ISA savings in the name of the lower taxpayer could mean you'll take home more – as the lower taxpayer gets a higher personal savings allowance. Obviously, this only matters if the higher-rate taxpayer is exceeding their personal savings allowance.

    P.S. For those who aren't married or civil partners, there's a tiny risk that if one of you died within seven years of doing this, that there would be inheritance tax to pay on it.

  • Can I earn more if I invest instead of save?

    Many choose to store at least part of their savings in investments as it has the potential to outperform standard savings accounts. This can include traditional investments such as shares and funds, or less conventional methods such as artwork or even whisky!

    Though with all types of investing, it's important to understand that it comes with risk. Remember: the value of your investments can go down as well as up. If you decide to do it, it's recommended you invest for the long term (five years or more), as the longer you invest, the longer you have to ride out any bumps in the market.

    See our beginners guide to investing if you'd like to learn more.

  • Are there any 'green' savings accounts?

    If being green is your top priority then you're unfortunately going to have to sacrifice somewhat on rate – as green accounts do tend to pay lower rates.

    Though there are decent options – see our Green savings guide to learn more.

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