Saving accounts explained

Understanding the different savings accounts available can make all the difference, ensuring that you have the right account in place to help you achieve your savings goals.

We understand that for some, saving might seem difficult, but there are ways to help your pennies go further. Choosing the right account for your savings can be tricky. It’s not just about picking the best rate, it’s making sure your hard-earned money is going to achieve what you want it to, both in the short and long term.

To help you, we’ve explained the types of savings accounts available, so you can choose the account that’s right for you.

Fixed or variable rate, what does it mean?

When looking for a savings account, the interest rate is described as either fixed or variable.

Fixed Interest Rates

If the account has a fixed interest rate, the rate won’t change during the  term of that account, giving you certainty of the interest you’ll earn.

For example, if you open a 1 Year Fixed Rate Bond with an interest rate of 4.00%, and deposit £1,000 at the end of the one year term, you’ll earn £40.00 of interest.  

Variable Interest Rates

For accounts with a variable rate of interest, the rate you get when you open the account can change, this means it could go up or down. At The Cambridge, if the rate goes down, we’ll give you prior notice before reducing the rate. Be sure to check the terms and conditions before opening any savings account.

Now we’ve explained the types of interest rates, read on to find out more about some of the different savings accounts available, to help you find the account that's right for you and your circumstances.

 

Easy access accounts

An easy access account is ideal for short term savings. Subject to the account terms and conditions, you can usually top up your savings or withdraw them whenever you want, without giving notice or paying a interest penalty fee. An Easy Access Account is great for saving for short term goals such as a holiday or for putting away funds for those unexpected financial emergencies, such as car repairs or a large household bill, giving you quick access to your money.

View our Easy Access Accounts

 

Cash ISAs

Individual Savings Accounts (ISAs) are tax free savings account. Meaning you won’t pay tax on the interest earnt, so you get to keep every penny of it.

You get a new ISA allowance every tax year, so you can currently pay in up £20,000 for 2024/2025. Our cash ISAs are available to anyone who is a UK resident, for tax purposes, and aged 16 or over.

You can only pay into one Cash ISA at The Cambridge each tax year, but it's possible to transfer previous tax years Cash ISA savings to another provider during the tax year.

Cash ISAs are just one type of ISA, there are three others:

• Stocks and Shares ISAs
• Innovative finance ISAs and
• Lifetime ISAs

You can save up to £20,000 in one type of ISA account or split the allowance across any combination of the four types of ISAs, however a maximum of £4,000 can be invested in a Lifetime ISA each tax year.

Example: You could save £16,000 in a Cash ISA and £4,000 in a Lifetime ISA in one tax year.

The Cambridge currently offers cash ISAs only.

You can see our current range of cash ISAs here.

 

Fixed rate bonds

These savings accounts are for a fixed period usually between 1 and 5 years and gives a better insight into how much your money will grow by the time it matures, as the rate won't change during the fixed period.

You open your bond with a lump sum amount and usually are unable to withdraw funds or make additional payments into the account during the term of the bond. Bonds are good if you have a pot of money you can lock away for a fixed term, without needing access to it. They usually have a higher rate of interest than a easy access account.

 

Children's savings

The range of children’s savings account often mirror those for adults, such as easy access accounts, Junior ISAs and fixed rate bonds. There are a few differences, like how you operate the account and there's usually no tax to pay on the interest earnt.

You will have to inform HMRC if you've given your child money which earns over £100 in interest in the tax year, but doesn't include money in a Junior ISA or Child Trust Fund.

They’re good to help save for their future, whether it be for a big life event such as driving lessons or something a little smaller, like the latest gadget. Whatever your reason, saving helps teach them the value of money, how to budget and create good saving habits, which they’ll hopefully continue.

View our range of children’s accounts and start their savings journey here.

 

Regular savings

You commit to making monthly payments into your savings account. How much you have to pay in each month, varies between saving providers.

With The Cambridge you open the account with a minimum £100 but can then pay in any amount up to £300 each month for 12 months and the rate is fixed for the year.

You'll often see that the interest rate is often higher on regular savings accounts than current or easy access accounts.

There can be more restrictions with regular savings accounts, like the number of withdrawals (if any) and number of payments into the account each month, different lenders have different terms and conditions, so make sure you check before opening the account.

Regular Savings Account are good if you can put money away each money, rather than a lump sum, and you can watch your savings grow monthly.

Get into the savings habit with a regular saver

 

Notice savings account

These accounts allow you to withdraw your savings, as long as you give notice to withdraw your funds or pay a interest penalty fee to withdraw your funds immediately. The notice period and interest penalty fees differs between providers, so please check the terms and conditions.

Notice Accounts usually pay higher rates of interest than easy access savings accounts. And could be an ideal option if you may need access to your savings.

Find out more about our Notice accounts.

 

Business and council savings

Business savings accounts work in the same way as personal savings account, but are opened by and for the purpose of the business, not individuals. Business savings accounts tend to earn more interest than a business bank account (used for every day transactions), so are great for helping you to achieve your business goals.

Just like personal savings account, there are a range of accounts available for businesses, from Bonds to Notice accounts.

Our Business Savings accounts are available to sole traders, partnerships, limited companies, public limited companies, registered charities and housing associations. We also offer a Council Saver account, available for Town and Parish Council customers.

Products are subject to availability and may be withdrawn at any time.

 

View our savings account