Savings accounts come in many forms. We have split them into seven groups; Internet, instant access, notice, savings bond, mini cash ISA, TESSA only ISA and child savings, and have provided an explanation of each type along with the highest rates available.

Internet
Internet savings accounts offer better interest rates on average than high street savings accounts, the reason being that the overheads of setting up and administering the account are lower and the savings can therefore be passed on to you. Having an Internet savings account brings you the convenience of being able to manage your savings whenever it suits you, 24 hours a day.
Most Internet accounts will allow you to check your balance, make transfers and view statements for the period of your choice. In addition to making an online transfer into your savings account, money can also be paid into the account through a standing order or by sending a cheque in the post.
Money can be taken out of your account by either requesting a cheque to be sent to you, or by electronically transferring funds to another account.

Instant Access
Instant access accounts offer a lower rate of interest compared to accounts that require you to give notice before withdrawing money. However, if you shop around you will find that there are instant access savings accounts available that offer higher interest rates than the majority of notice savings accounts.
Interest is paid monthly or yearly and in some cases you will be able to choose. As with all savings accounts, the minimum deposit that can be made in order to open the account will vary from one bank / building society to the next.
Interest rates are usually banded according to the balance in your account, meaning the more money you save the higher the rate of interest you'll earn. Opening a savings account with a building society qualifies you for membership of that building society, which in turn means you may be eligible for special benefits and exclusive offers.
Many savings accounts are issued with 'passbooks', especially building society savings accounts. These are small books that you present when make a deposit or withdrawal. Therefore, they provide a convenient, up to the minute record of your balance and a history of transactions made.

Notice
Notice savings accounts require you to give advanced notice to the bank / building society that you wish to withdraw money from your account. If you do not provide sufficient notice then you will be penalised in the form of lost interest.
Generally, notice accounts will offer a higher rate of interest compared to instant access accounts. However, when you compare accounts from different banks/building societies, this is not always the case.
Notice accounts will vary with regards to how many days notice you are required to give. Typical notice periods are 30, 60 and 90 days. Some notice accounts offer a little more flexibility in so far as you are permitted a certain number of instant cash withdrawals each year without penalty, perhaps two or three. This can be very useful if you need to access your money in an emergency.
Other notice accounts will offer an annual bonus if you don't touch your money for a year. The bonus can be withdrawn, once credited to your account, without losing the following year's bonus. As with all savings accounts, the minimum deposit that can be made in order to open the account will vary from one bank / building society to the next.
Interest rates are usually banded according to the balance in your account, meaning the more money you save the higher the rate of interest you'll earn. Opening a savings account with a building society qualifies you for membership of that building society, which in turn means you may be eligible for special benefits and exclusive offers.
Many savings accounts are issued with 'passbooks', especially building society savings accounts. These are small books that you present when make a deposit or withdrawal. Therefore, they provide a convenient, up to the minute record of your balance and a history of transactions made.

Savings Bonds
Fixed rate savings bonds are investments that offer a guaranteed fixed interest rate for the term of the investment, which is typically 1, 2 or 5 years. Interest is paid net of savings tax at 20%. The terms of the bond will state how money may be deposited, i.e. whether deposits can be made as a lump sum and/or on a regular basis.
You are required to keep your money invested for the full term of the bond in order to benefit from the higher interest rates offered. Withdrawals are not permitted. Savings bonds offer tiered interest rates, so the more you invest the higher the rate of interest earned.
Savings Bonds offer growth, whilst protecting your capital. Your returns are not dependant on fluctuating interest rates, only by the period of the savings bond, with higher interest rates being offered for longer investment periods. The fixed rate of interest therfore offers security for those prefering a low risk investment, and makes planning your personal finances a little easier.
Savings bonds are also available where a higher rate of interest is offered, but the decision as to whether the interest is paid is subject to the performance of the stockmarket.
You should check the conditions of such savings bonds as they will vary. The advantage of opting for this form of saving over investing directly in the stock market is that you remove the risk of losing any of your capital. So, no matter how badly the stockmarket performs over the term of your savings bond, you are guaranteed to get your initial capital back.

Mini Cash ISA
A Mini Cash ISA allows you to invest up to £3,000 a year and benefit from tax free interest, but at the same time give you instant access to your cash. They are only available to those over 16.
The Government has guaranteed that ISAs will be available until April 2009, allowing you to plan your future savings with confidence. Two types of ISA are available; Mini and Maxi. A Maxi ISA allows you to invest up to £7,000 in stocks and shares within a tax year, with profits being free from capital gains tax. Once you have subscribed to a mini ISA you cannot subscribe to a maxi ISA in the same tax year, even if you cancel the mini ISA, and vice versa.
Mini cash ISAs come in different 'flavours', including internet, instant access and notice accounts. Some accounts will meet the Government CAT Standards. This means that the account has low (C)harges, easy (A)ccess and fair (T)erms. It does not indicate a guarantee of performance and it does not mean that the account is necessarily suitable for you.
You can deposit lump sums or regular payments into your account. Interest is paid monthly or yearly and in some cases you will be able to choose. As with all savings accounts, the minimum deposit that can be made in order to open the account will vary from one bank / building society to the next. Interest rates are usually banded according to the balance in your account, meaning the more money you save the higher the rate of interest you'll earn.

Tessa Only ISA
A TESSA, or 'Tax-Exempt Special Savings Account', is a five year savings account that benefits from no tax deductions on the interest accrued. TESSAs were launched in January 1991 with new accounts being opened until 5 April 1999 when they were replaced by ISAs (Individual Savings Accounts). TESSAs are five year savings plans, with up to £3000 being invested in the first year and up to £1800 in each of the subsequent four years, to a maximum of £9000.
All interest on a TESSA continues to be free of income tax, provided no capital and not more than 75 per cent of the interest is withdrawn until the end of the 5 year term. Since 6 April 1999 it has not been possible to open a TESSA. However, it is possible to continue to add funds to a TESSA opened before that date, until the maturity date, without counting towards the annual ISA investment limits.
When your TESSA matures you can transfer the capital (not any interest), up to £9,000, into the cash component of a Mini or Maxi ISA, or alternatively into a TESSA Only ISA account. Again, this is on top of the normal annual ISA limits. The sole purpose of a TESSA Only ISA is to receive transferred TESSA capital. In order to qualify for a TESSA Only ISA you must transfer the TESSA capital within six months of the date when the TESSA matured. TESSA interest and bonuses cannot be transferred to an ISA under the special rules. If you are transferring a maturing TESSA from another bank or building society, you will need to provide your TESSA Maturity Certificate when you open your ISA.

Child Savings
A savings account for your child provides an excellent way of getting them into the habit of saving. Child savings accounts are usually divided into accounts for children under 12 and those between 13 and 17, although the age ranges will vary.
Child savings accounts for the under 12's often come with some form of welcome pack containing 'things to do' and special offers. Because children don't tend to have vast quantities of cash to save, most accounts can be opened with as little as £1.Similarly, in most cases, savings accounts for teenagers can also be opened with a minimum balance of £1.
The account often comes with a passbook for depositing and withdrawing cash as well as a cash card for withdrawing cash from cash machines. It is becoming more and more common to be able to manage child savings accounts via the internet. Interest rates are usually banded according to the balance in your account, meaning the more money you save the higher the rate of interest you'll earn.

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