UK Savings Week 2025

We know how important it is to save money. Whether you’re saving for a holiday, a new car, or just for a ‘rainy day’, saving can help make your future plans feel more achievable and rewarding.

Choosing the right savings account can give you peace of mind that your savings are secure, accessible if needed, and support you to achieve your financial goals with less worry about financial issues.

What should you consider?

Interest rate and getting as much return on your savings is the most common driver for customers to open a savings account. However, it is worth bearing in mind that the higher the interest rate, the more likely there will be restrictions or penalties to these accounts.

Restrictions include, but aren’t limited to, the following:

Access: Some accounts have higher interest rates because they either limit the number of withdrawals you make, or don’t’ allow withdrawals at all.

Limited Access: These accounts will encourage you not to touch your savings needlessly. They offer competitive interest rates and/or bonuses for meeting withdrawal requirements but may penalise withdrawals that exceed the limit on the account.

Notice: With a Notice account, you’ll need to wait a certain amount of time before you can access your money. This could be 30 to 180 days. Although there is no limitation to how many times you can give notice to withdraw, it does mean that you cannot access your savings immediately, without paying a penalty. These are suitable if you can plan ahead for when you’ll need access to your savings.

Fixed Term: Some accounts, such as a Fixed Bond, will involve fixing your money away for a certain amount of time, which means no access until that time has ended. This is the ‘term’ and can range from six months to five years. Similar to a Fixed Bond, a Fixed Cash ISA does allow for  early withdrawals however it is important to note that these often incur significant penalties, so these accounts are best for long-term savings where you don't need immediate access.

Balance: In some cases, you may have to deposit a larger balance to open an account, and in other cases, you may be restricted by how much you can deposit per month. Considering how much you have or are likely to save is important to make your money work hardest for you.

A key consideration when finding a savings account is understanding whether you’ll need to access the money quickly.

If you’re not looking for immediate access, understanding the different levels of limited and restrictive access can help you get the best out of your savings, when you need them most.

What else is there to consider?

Bonus Accounts

These accounts may have a ‘conditional bonus’, where a bonus is paid if a condition is met. The condition could be based off a set number of withdrawals allowed during a specific period, or that you keep your savings account above a certain balance. It’s also worth noting that a bonus might only be paid for a certain period of time.

Tax on Savings

When comparing savings accounts, it's crucial to understand the tax implications. Interest earned on savings is paid without tax being deducted, however that is generally subject to income tax. In the UK, the amount of tax you pay on your savings interest depends on your income tax band.

Personal Savings Allowance (PSA): This allowance lets you earn a certain amount of interest tax-free each tax year depending on your income and tax status. To understand the limits please visit: https://www.gov.uk/apply-tax-free-interest-on-savings

ISAs (Individual Savings Accounts): ISAs offer tax-free interest. Each tax year, you have an ISA allowance (£20,000 for the 2025/2026 tax year), which can be spread across different types of ISAs, including cash ISAs, stocks and shares ISAs, innovative finance ISAs, and lifetime ISAs.

Junior ISAs (JISAs): These are tax-free savings accounts for children under 18. Parents , guardians, or children from the age of 16 can save up to a certain limit (£9,000 for the 2025/2026 tax year) each year without paying tax on the interest earned.

When choosing a savings account, consider how the interest will be taxed and how it fits into your overall financial strategy. ISAs are popular for long-term savings due to their tax-free status. Understanding these tax considerations can help you maximise your savings and minimise your tax liability.

Fees and Charges

When choosing a savings account, be mindful of any fees or charges that could reduce your savings. Some accounts may have monthly maintenance fees, transaction fees, or charges for specific actions, such as withdrawing money early or not maintaining a minimum balance. These fees can significantly impact the overall returns on savings. To avoid these costs, there are accounts with no or low fees so read the terms and conditions carefully to understand potential penalties. Comparing fees across different accounts will help you find the most cost-effective option and maximise your savings.

Your savings are what you make of them

It is never too late to start saving, with no better time to start than now. Monmouthshire Building Society offer a range of savings accounts. Remember to review savings accounts regularly to ensure it is still the right account to meet your goal.

The information provided in this article is not intended as advice.

Monmouthshire Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Financial Services Register Number: 206052.