In the UK there are really three types of bank accounts. These accounts are current accounts, bank savings accounts, and Isa savings accounts. There are some notable contrasts between them, and the accounts can have a variety of features.
The current account is one of the basic bank accounts. Essentially, current accounts are accounts for smaller deposits and transactions. With most current accounts the interest rates are measly and unnoticeable, usually a small fraction of a percent. However, the current accounts are easy access, especially with debit cards and also cheque books. In addition to this, the best current accounts can give good interest rates such as 4%, and also other a variety bonuses. It should also be noted that to open some other alternative accounts it can be required to have a current account with the relevant bank.
Bank Savings Accounts:
Bank savings accounts are accounts that are more suitable for larger deposits. Or to put it another way, they provide a higher rate of interest than average current accounts. This is usually a few percent such as 2, 3, 4 or 5%, perhaps even higher depending on the base rate. Therefore, with these savings accounts some notable interest can be accumulated with larger deposits. As such, savings accounts are good to have in this respect, though the disadvantages can be that not all may be easy access. In fact, some may not allow for withdrawals to receive the AER. Also worth noting is that interest may be subject to taxation, so it is worth checking the savings accounts details.
As mentioned, savings accounts can be subject to taxation. So, step forward Isa accounts which are tax-free savings accounts. Therefore, this is an obvious advantage in relation to standard savings accounts. Isa accounts also have limits us to how much can be saved annually which is up to £5100. Overall, the interest rates of Isa accounts can be higher than those of savings accounts, up to and over 5% depending on the base rate. This aside, Isa accounts can be either easy or more limited access so it is worth checking the Isa account details also.
As mentioned, these accounts will certainly have contrasting interest rates, which is usually either variable or fixed. Essentially, variable rates can change while fixed rate accounts are usually higher rates which do not. Fixed rate accounts tend to be accounts that are opened for a limited time period, usually stated as a year or two. In addition to this, such accounts can be either easy or more limited access.
So, these are the three main types of UK bank accounts. Current accounts, savings accounts, and Isa accounts can be opened with most UK banks like Natwest and Barclays, and can be branch or Web based.