Savings accounts are a great way to make your money work for you. However, the world of savings accounts can be confusing, with many different types of account, interest rates, notice periods and more, so where do you start?

The team here at Mansfield Building Society want to use our expertise and knowledge to help you better understand what savings accounts are and how they work. We want to give you a basic understanding of savings accounts and put you well on your way to being able to choose the right savings account for you!

What are savings accounts?

Savings accounts can be with a bank, building society or other financial institution that pay interest on the money that you put in. Typically, cash savings accounts can offer stability making them ideal for building a cash reserve that you can put to work over the short-term or over several years. With cash savings, your money is at less risk than with investments in stocks and shares, and with the Financial Services Compensation Scheme (FSCS), your savings are protected up to the value of £85,000 in case the bank or building society fails.

One example is having an emergency fund in an easy access savings account. This would allow the money that you aren’t currently using to earn interest and increase in value, whilst giving you instant access for when you need it.

How to open a savings account

The process of opening a savings account can be straightforward but can vary a little depending on the type of account you’re trying to open and who you’re wanting to open the account with. In many cases, you’ll be able to apply online (including via an app if the provider has one), by post or at your nearest branch.

Whether it’s online, by post or in branch, there are some common steps that you’ll likely have to take when opening a savings account. These steps are explained below.

Application & Documentation

During the first step of the application process, you’ll likely be asked for your name, date of birth, address, and phone number. Savings account providers also need proof of your identification, which can be done via an independent Electronic Search and makes the process simple. However, you may be asked to provide documentation such as photo ID and proof of address if the search doesn’t work. This is nothing to worry about and providers can help you through the process.

Decide on your savings goals

Before you apply though you’ll need to decide on the type of account you want. Try and think of what your savings goals are – are you saving for something special, looking for an emergency fund or wanting to make the most of a windfall (such as an inheritance)? Once you know what your savings goals are, you can begin to understand what you want your savings account to do.

Along with advice on existing credit commitments and savings habits, this short podcast explains how having a goal can motivate you to keep saving.

Mansfield 103.2 · SPOTLIGHT ON SAVINGS – MBS – 21st SEPT

How much can you save and how can you access it?

Some types of savings account, such as fixed rate bonds, will need you to provide a minimum amount to open the account. This is referred to as the minimum deposit or balance.

Alongside the minimum deposit, you will need to think about how quickly you might want to access the funds. It’s important that you read the terms and features of the account you want to open.

Another important point to note is if you’re happy to move your money around digitally or you’re comfortable with cash and cheques. If your account is managed by post or in branch, you may not be able to transfer money digitally, or you may have to pay to do so.

In this short podcast, we talk about budgeting for savings by setting time aside to review your income and expenditure and by thinking about your needs and wants.