Most savings accounts offer a certain amount of flexibility when compared to investments – but the longer you let a bank or building society hold onto your money, the more interest you are likely to get.  You can access some accounts immediately or within a few days, but others do penalise you for taking money out without longer notice. While some go up and down with the Bank of England Base Rate (BEBR), others are fixed at a set level.

Here are the main types of Savings Account:

Instant or Easy Access: With these accounts you can usually start off with just £1, get access quickly and take a variable interest rate which moves up OR down with the BEBR. But, rates are usually a bit low as you can get money out whenever you like, bonuses and incentives may mean withdrawal fees. You can usually get a cash card or a passbook, and get better rates on internet accounts.

Notice Accounts: Usually need to start off with a few hundred pounds and you will not be able to get cash out straight away. Can be 30, 60, 90 or 120 days notice to access without a penalty. A penalty will usually be calculated on the amount withdrawn and will equal the interest rate for the notice term. Usually variable interest, based on BEBR.

Regular Deposit: You must invest a certain amount each month. However, there is not much flexibility and there are limited withdrawals. These accounts can be instant or easy access or notice accounts and may have penalties for withdrawals or missing monthly deposits.

Fixed Rate Accounts: Offer fixed rate of interest for a set period. By not going with a variable rate, you may miss out on increases to interest rates, but you may also be better off if the BEBR drops. Watch out for minimum balances. If you can afford to lock your money away, this is a good way to go.