Finance glossary
Savings Account
Also known as: Deposit account
In simple terms
A savings account is a bank account for money you want to set aside rather than spend day to day. The bank pays you interest on your balance, and your money is protected up to £85,000.
On this page
What does savings account mean?
A savings account holds money you are not spending immediately and pays interest in return. Unlike a current account, it is built for growing a balance rather than everyday transactions, and typically has no debit card.
There are several types: easy-access accounts let you withdraw whenever you like; notice accounts require a set number of days’ warning; and fixed-rate bonds lock your money away for a term in exchange for a higher rate. Cash ISAs are savings accounts where the interest is tax-free.
How a savings account works
You pay money in and the bank adds interest, usually quoted as an AER (Annual Equivalent Rate) so you can compare accounts on a like-for-like basis. Rates can be fixed or variable, and easy-access accounts sometimes include a temporary bonus that drops off after a year.
Interest may be taxable, but the Personal Savings Allowance lets most basic-rate taxpayers earn a set amount of savings interest tax-free each year; a cash ISA keeps interest tax-free regardless. Locking money away for longer generally earns a higher rate.
How could this affect me?
A savings account keeps your money safe, accessible and growing, and is the sensible home for an emergency fund. As with current accounts, deposits are protected by the FSCS up to £85,000 per person, per banking group.
Rates change, so a good deal today may not stay competitive — it is worth reviewing yours and moving if it slips. Weigh access against return: locking money into a fixed bond pays more but means you cannot dip in without penalty.
Things to watch out for
- Headline rates may include a bonus that disappears after 12 months — check the underlying rate.
- Fixed-rate bonds lock your money away; early access is usually restricted or penalised.
- If inflation is higher than your interest rate, your money loses spending power over time.
- The £85,000 FSCS limit is per banking group — spreading large savings can keep you fully protected.
Know your rights
- Eligible savings are protected by the FSCS up to £85,000 per person, per authorised banking institution.
- Providers must give you clear information about the rate, including the AER, before and during the account.
- If your provider treats you unfairly, you can complain and escalate to the Financial Ombudsman Service.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- MoneyHelper, Types of savings account (opens in a new tab). Accessed 22 Aug 2026.
- FSCS, What we protect — banks and savings (opens in a new tab). Accessed 22 Aug 2026.