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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
Bankrate follows a strict , so you can trust that we’re putting your interests first. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. Key Principles
We value your trust. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate. We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader. Our goal is to give you the best advice to help you make smart personal finance decisions. We follow strict guidelines to ensure that our editorial content is not influenced by advertisers. Our editorial team receives no direct compensation from advertisers, and our content is thoroughly fact-checked to ensure accuracy. So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. Bankrate logo How we make money
You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. and are basically an arrangement to lend money to a bank in the form of deposits, which they promise to keep safe until you withdraw or spend it. That promise is backed by the Financial Services Compensation Scheme, which insures deposits of up to £85,000 per person per banking group. While having a current account is almost mandatory if you live in the UK, you might think that a savings account is a nice but unnecessary option. In reality, depending on your financial situation, you may benefit from having both types of bank account. Understanding the differences between a savings account and current account will help you decide. Current accounts
Transactional: Traditional current accounts are transactional accounts, meaning banks expect you to frequently take out money, with few restrictions on the timing or amount of those transactions. To help make those transactions as convenient as possible, current accounts typically come with the ability to make payments with a debit card, or via or online banking websites. Typically fee-free, but watch out for overdrafts and charges: Most current accounts in the UK are fee-free, unless you opt for a or where you’ll usually pay a monthly fee in exchange for cashback, rewards, or other perks. Banks have to make their money somewhere, though, and that’s usually through overdraft fees – or charges if you try to pay a direct debit or standing order and don’t have enough money in your account. Read our explanation of – and if you’re likely to use an overdraft regularly, be sure to get an that doesn’t smack you with giant fees. No interest payments: Most traditional current accounts won’t pay you any interest, no matter how much is in the account. Many banks now offer a linked , though, which is only available if you have a current account with that bank. Savings accounts
Longer-term investment: Savings accounts are closer to a form of investment than a transactional account. You’re giving a bank access to your cash, typically for longer periods than with a current account, so they can loan out almost all of it to earn a return. Harder to spend: Most savings accounts, by design, make it harder to spend your deposited money directly. You may still get a debit card or access to a mobile banking app – but there is often a restriction on how many withdrawals you can make per year, or a minimum deposit threshold that you must exceed. In the case of , your funds will be completely locked away until the account matures – but you’ll be rewarded with a higher interest rate. Few fees: With savings accounts, banks make money off the “spread” – the difference between the interest rate they pay you and the interest rate on the loans they fund with your money. Because of that, and the fact that they don’t cost as much as current accounts to administer, banks typically charge little, if any, fees on savings accounts. Pays interest: With the , the yield on savings accounts isn’t great – but it’s usually better than just keeping your cash in a current account with 0% interest. The will get you around 1.3% interest today. If you can put the money away for a year or two, a fixed rate savings account will get you around 2%. Shop around to make sure you get . Why you need both
It’s very likely you already have a . While they are a convenient way to pay for things, current accounts are terrible places to save: they usually give you no interest at all, and it can be harder to build up your savings when it’s so easy to spend it! Getting a savings account, and committing to regularly putting money into it, is a great way to start building up a savings pot that could be used as a or as your emergency savings fund. If you’re worried about the hassle of managing multiple accounts, then consider getting a current account and savings account from the same bank – both accounts will usually be linked together through the bank’s mobile banking app, making it very easy to move money around. Now read our SHARE: Claes Bell, CFA Related Articles