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How to choose a savings account that works for you
May 13, 2026
With so many different options on the market, choosing a new savings account can seem overwhelming. Here we explain how to compare them, so you can pick one that suits your needs best.
What is a savings account?
Held with a bank or building society, a savings account is somewhere you can save your money, earning interest on it while you keep it there.
Keeping money in a savings account helps it grow in value. This growth is known as interest, and while savings accounts generally pay a reasonable interest rate, their safety and reliability make them a great option for storing your money until you need it the most.
The difference between savings and current accounts
A current account is used for everyday banking, a place where you’d have your salary paid into and make payments for bills and everyday items such as groceries and clothes.
Current accounts generally have lower interest rates than savings accounts, and don’t always reward account holders for retaining money in the same way savings accounts do.
Things to look out for when opening a savings account:
What’s the difference between the AER and the gross rate?
The Annual Equivalent Rate (AER) is a rate used by UK banks to help customers compare savings accounts. The AER illustrates what your interest rate (the gross interest rate) would be if interest was only paid and compounded once each year.
For example, if interest is paid once a year, then the gross interest rate and the AER would be the same, as interest is only applied once. But if interest is paid monthly – as with our Online Savings Account – then the AER may be higher than the gross interest rate.
This is because the AER will take into account the compounding interest that you earn every month over the course of a year.
The key thing to remember when comparing different savings accounts is to compare like with like – so AER with AER, and not AER with gross. To ensure you are getting the best deal, always use the AER when comparing different savings accounts. The AER is the 'universal language' of savings, it accounts for how often interest is paid and any bonuses, allowing you to see exactly how much your money will grow over a full year regardless of which bank you choose.
How do bonus rates work?
Some savings accounts offer a bonus rate on top of the underlying interest rate. This is an additional percentage of interest paid for a set period of time.
When the bonus rate ends, the overall interest rate you earn on that account may revert back to the underlying variable rate. When this happens, it’s a good time to check comparison sites to see if you could be getting a better deal elsewhere. At Marcus, we make this transition simple: you can often "renew" or "add" a new bonus rate if one is available on your account, without needing to move your money to a new account.
Which savings account might be right for you?
Having a range of different accounts, with different purposes, can help you make the most of your money. There are several different types of savings accounts, including:
Easy access accounts
Like our Online Savings Account, these give you the flexibility to withdraw money without having to give any notice. The interest rate tends to be variable, which means it can change from time to time.
Fixed rate savings accounts
These give you the security of locking in an interest rate for a set length of time, so you’ll know exactly how much interest you’ll earn over that period but usually access to your money is restricted. So, they may not be a good choice if you need to dip into your savings regularly.
More about our 1 Year Fixed Rate Saver
Cash ISAs
The main difference between Cash ISAs and other savings accounts is that you don’t pay UK tax on the interest you earn on the savings you hold in an ISA. While there’s a limit* to how much you can put in each tax year, they can be a good way to grow a tax-free† savings pot.
About our savings accounts
Available to UK residents over the age of 18, you can open any of our savings accounts with as little as £1.
†Tax-free is the rate payable where interest is exempt from UK income tax. Your savings balance will be eligible for this tax benefit for so long as it is held in a valid cash ISA account.
*Each tax year, the government sets a contribution limit for ISAs. That’s the total amount you can pay into any ISAs you hold, with any bank within a tax year. For more information on the annual ISA contribution limit, please visit the GOV.UK website.
This article is for informational purposes only and is not a substitute for individualised professional advice. Articles on this website were commissioned and approved by Marcus by Goldman Sachs®, but may not reflect the institutional opinions of The Goldman Sachs Group, Inc., Goldman Sachs International Bank, Goldman Sachs & Co. LLC or any of their affiliates, subsidiaries or divisions. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. This article is not a product of Goldman Sachs Global Investment Research. The information contained in this article does not constitute a recommendation from any Goldman Sachs entity to the recipient, and Goldman Sachs is not providing any financial, economic, legal, investment, accounting, or tax advice through this article or to its recipient. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the statements or any information contained in this article and any liability therefore (including in respect of direct, indirect, or consequential loss or damage) is expressly disclaimed.
| Savings interest rate (AER)(1) |
Savings Balance Before Paying Tax | |
| Basic rate taxpayer | Higher rate taxpayer |
|
|---|---|---|
| 1% | £100,000 | £50,000 |
| 2% | £50,000 | £25,000 |
| 3% | £33,333 | £16,667 |
| 4% | £25,000 | £12,500 |
| 5% | £20,000 | £10,000 |
The content in this article is for information only and is not advice. All content in this article was accurate on the date of publication shown above.
