Different types of savings accounts to consider

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Different types of savings accounts to consider

If you’re looking to grow your wealth, a savings account can be a great way to earn some passive income. With these accounts, you’ll simply deposit money and earn interest on it. Your return on investment can then be paid monthly or in one lump sum at the end of an agreed period.

While the cost of living crisis is making it difficult to put money aside with around one in five Brits unable to save, if you can spare even a few pounds every month, it’s better thannothing! This can help you create saving habits and motivate you to keep going.

If a savings account sounds like the thing for you but you’re not sure which one you want, we can help. Our guide below will cover common savings accounts that most banks will offer, so read on to find out more and start growing your wealth today.

How can I save more money?

As mentioned, saving is tough at the moment and we understand that. If you do want to give yourself the best chance of having some leftover cash to save, though, the 50/30/20 rule could help.

With this, you’ll split your monthly wage into three pots. 50% should be spent on rent and your bills, 30% should be used in your everyday life and 20% can be put into savings. This can be adjusted accordingly but it’s a great place to start your saving journey.

What are the savings accounts I should consider?

The following savings accounts are all terrific options but serve slightly different purposes and offer diverse benefits. Check them out to see which one suits your situation best.

Regular savings account

This is a reliable option for those wanting to save. They typically offer good interest rates and run for a pre-agreed amount of time, typically one year. You’ll pay in each month and it should help you build healthy savings.

These accounts sometimes put limitations on the number of withdrawals you can make every year and may have a maximum amount you can pay in.

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Fixedrate bonds

If you’re willing to lock your money away for a long time, fixedrate bonds offer plenty of benefits. You’ll get a clear picture of what you can earn and may be offered very good interest rates. However, you may pay penalties on the interest earned if you withdraw early.

Lifetime ISA

Saving towards a home or retirement? This is a great choice. You’ll get £1 from the government for every £4 you save, up to a maximum of £4,000 a year. There are penalties for early withdrawals unless you’re using the money to buy your first home. Once you’ve paid for your home, your lifetime ISA will continue until later in life.