Disclaimer: Our website and publications aim to give you general information to help you make financial decisions. It is not advice, nor can it take account of your own particular circumstances. For advice with a view to making decisions about your own circumstances you should consult a financial or other professional adviser.

© The Financial Services Authority.

Savings made clear

Putting a little money away regularly is the best way of saving up for expensive things, like a holiday, furniture, or a special family occasion.

There are two ways to save – short term and long term. Savings accounts are for times when you may need to get at your money quickly. They’re different from investments, which are really for the longer term.

This section of the site will tell you about the different types of savings products, how they work, and where you can go to compare savings accounts. It will also make things clearer by explaining all the jargon.

How can you save?

You usually put your money into an account where it earns interest without the risk of losing any of it (short of a bank, credit union or building society collapse). You can usually get your money out immediately or after a notice period, sometimes 30, 60 or 90 days.

Your money grows from interest being added either monthly or yearly, but this can be a slow process and can take many years for your original deposit to grow by very much. You also need to save regularly and not dip into it, if you can help it. Be aware of the impact inflation can have on your savings – see Inflation.

There are also other ways to save, for example, saving stamps or schemes but your money doesn't earn any interest, so doesn’t grow – see Types of savings.

Where can you save?

A wide range of savings accounts is available from banks, building societies, credit unions and National Savings and Investments (NS&I) – for more information visit Types of savings. You can compare savings accounts using our Compare savings accounts tool to see which might be right for you.

Inflation

Inflation happens when prices go up throughout an economy. The effect of inflation on your money means that the money you save will buy less each year.

To protect your savings against this, you should look for an after-tax interest rate that is more than the rate of inflation. Or if you want to put your money away for a longer period and are prepared to take the risk that your money could fall in value (as well as rise), you could put some into an investment linked to the stock market. For more information visit Investments.

Protection

The Financial Services Compensation Scheme (FSCS) can pay compensation for financial loss of up to £35,000 for deposit claims (which is 100% of the first £35,000) if a deposit-taking firm (such as a bank, building society or credit union) is unable to pay back deposits it owes to its members.

The actual level of compensation you receive will depend on the basis of your claim – see the FSCS website for more details.

Different arrangements apply for credit unions in Northern Ireland – see Getting help.

Firms not based in the UK

By law, most financial services firms must get our authorisation before they can do business in the UK. Our Register has information on all authorised firms currently doing business in the UK. The Register includes firms that are UK authorised as well as those authorised in another European Economic Area (EEA) state that also conduct business in the UK.

If you are considering or currently doing business with a firm authorised in another EEA state you should ask for further information from the firm or its UK branch about its complaints and compensation arrangements. This is because the position may differ compared to a UK authorised firm.

If you do business with a UK branch of a bank authorised in another member state the compensation arrangements will not be the same as FSA-authorised banks based in the UK. The FSCS website has more information about this – see Related links.