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.

Types of savings product

The main types of saving product are:

  • bank and building society savings accounts;
  • National Savings and Investments; and
  • credit union savings accounts.

You may have also heard about cash or deposit ISAs (Individual Savings Accounts) these are a type of savings account available from banks, building societies or National Savings and Investments.

In addition to regular savings accounts, you can also save in special Christmas savings accounts offered by some building societies and most credit unions.

Banks and building societies in the UK must be regulated by us to be able to take your money and hold it. We also regulate credit unions in England, Scotland and Wales. The Companies Registry in the Department of Enterprise, Trade and Investment regulates credit unions in Northern Ireland – see Related links.

Savings accounts

Savings accounts generally pay higher interest rates than current accounts. You can find them at banks, building societies and through National Savings and Investments (NS&I). They are generally low-risk investments suitable for short to medium-term savings.

Savings accounts are deposit-based. This means you’ll usually get back the money you have put in plus interest, unless the bank or building society collapses. But if this happens, and as long as the firm is regulated by the FSA, the Financial Services Compensation Scheme may be able to pay compensation to customers, up to a set limit. Visit their website for more information — see Related links.

Other ways to save

There are other ways to save for example, for specific items such as

  • Christmas hampers; or
  • Christmas gift vouchers.

You can also save in Christmas saving schemes and clubs run by supermarkets, large retailers, local shops, social clubs, pubs and workplaces. You usually save what you can, and then exchange your stamps or scheme for shopping, vouchers to spend, or you can buy other goods and services.

With these options you're not earning any interest on your savings so your money is not growing. You're also restricted to using the stamps for specific purchases depending on which type of shop you're saving with.

We do not regulate Christmas hamper schemes and other Christmas savings schemes and clubs. Therefore they are not covered by the Financial Ombudsman Service or the Financial Services Compensation Scheme. For more information get the OFT's Save Xmas – a quick guide to paying for Christmas leaflet – see Related links.

Save regularly

You can ask your bank to arrange for a set amount of money to be paid regularly from your current account into a savings account — this method is usually called a standing order. You don’t have to save with the bank you have your current account with; you can shop around to find a bank with a better interest rate. Use our Compare savings accounts tool to help you compare the features of different savings accounts and make a shortlist of to choose from.

Is it right for you?

If you are saving for the short to medium–term, say under five years, or you want a low–risk home for your savings, consider savings accounts.

Bear in mind that, over the longer term, your money may lose its value because of inflation.

So, if you have decided a low–risk product is right for you, here are some questions to ask yourself:

  • Can I manage my account online or by phone? If so, you may get a better interest rate.
  • Is it likely I'll need to get at my money quickly? If so, stick to instant access or easy access products.
  • If not, can I get a better interest rate if I tie up my money for a set term or have to give notice?
  • Do I want a fixed interest rate or am I happy for it to vary?
  • What is the best return I can get after deducting tax? Remember some products pay tax–free interest which boosts your return if you are normally a taxpayer.
  • Is it absolutely essential that my original capital remains intact? If not, you might find our Investments section useful.

Top tips

Do use our Compare savings accounts tool to compare NS&I with similar deposit–based products from banks and building societies.

Do check how much notice you have to give to withdraw your money.