How to choose a savings account

Although keeping your cash in a savings account may seem like a simpler process than entering the stock market, there are still important decisions to be made to ensure your money is working for you.

When your money is in a savings account, you can create returns by earning interest. But depending on which provider holds your money, and what kind of account you set up, you can see wide variations in the amount of interest you accumulate.

What is the Cash savings hub?

The AJ Bell Cash savings hub can help to streamline the selection process by putting a variety of savings account options in one place, allowing you to compare and find the right choice for you. You can open multiple accounts through the hub, which can help you spread out your savings and get  you more protection.

How does the Cash savings hub work?

The Cash savings hub is a service that comes at no cost to you – instead, the banks pay to be featured. But this doesn’t mean there aren’t strict criteria. Any bank included on the hub must be authorised in the UK  by the Prudential Regulation Authority, regulated by the FCA, and protected by the Financial Services Compensation Scheme (FSCS) to be considered.

Because all the banks featured are part of FSCS, this means that in the unlikely scenario the bank goes bust, you will be compensated for any money lost up to £120,000. You will have this protection per person for each bank  where you hold an account, so if the savings you’d like to enter exceed £120,000, you can spread the savings to different banks to fully protect your cash. Banks are also assessed on their interest rates and credit ratings before they can join.  

Steps to choosing a savings account

1. Choosing your account type

If using the Cash savings hub to open an account, you will need to choose between a fixed term deposit and a notice account.

• Fixed term deposit - A fixed term deposit means that you are agreeing to keep your money in the account for a set amount of time, which could be anywhere between three  months and five years. The benefit of using this type of account is that you typically will have a set interest rate. This means that throughout the time that your money is in that account, you will receive the interest rate that was set when you opened it.
• Notice account - If you instead opt for a notice account, you will be able to leave your money in the account for as long as you like but will need to give notice before you plan to withdraw. This is typically between a 30- and 95-day notice, depending on the account type. While this gives more flexibility for your account’s timeline, notice accounts have changing interest rates. If your notice account decides to lower its interest rate, it will inform you, and you will have the option to withdraw your money.

2. Determining savings rates

After determining if you’d like to use a fixed term or notice account, you can filter your options based on how much you want to put in the account, and, if using fixed term, what length of time you want to put the money in the account for. 

If you opt for a fixed term account, the total interest you will earn based on the account you choose and the money you deposit will be calculated for you.

Remember, if you choose a notice account, the interest rate you see listed may change. Although you will be notified of this change before it happens, you should not assume that your account will always make interest at that level. It could move up or down.

View all savings rates

3. Digging into the details

Once you find a rate that fits your needs, you can access further information about the account, such as the background of the bank and when your interest or profit rate will be paid. You will also be able to view documentation about the product, such as its deposit guarantee scheme and the product information sheet.

4. Funding your account

If you’ve found an account that suits you, you can begin the set up process. On your end, this account will be separate from your other investments through AJ Bell. That means you can’t use money in your platform investments account to fund your savings account. Instead, you will need to apply for a new account, which can sometimes take a few days to complete checks.

Once you’re approved, you can make a direct deposit from your bank to fund the account. You can open multiple accounts with different banks if you choose, which can give your money more protection as well as a variety of withdrawal times.

Learn more about our Cash savings hub