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Savings accounts

Whether you're trying to get together the money for a lavish wedding, or looking to keep some funds safe ahead of your retirement, setting up and choosing the right savings account is a hugely important task - and it's never too early to start looking.

Your first priority is figuring out what you need from your savings account

The characteristics of the type of savings account you plump for should be predicated on the amount you need to save, and the purpose for which you're saving it.

The obvious example is if you're trying to save for a big outlay like a holiday or your first home. In these circumstances you should make sure to separate your savings from any emergency money you may need throughout the course of the year. If you have to dip into your account early you may find interest is suspended.

That brings us to the second point: always read the small print

As well as suspending interest payments in the event of early withdrawals, some banks will also stipulate you must deposit funds within a certain time window, and anything after that window won't then be subject to the same interest.

These types of add-on conditions can have a huge affect on how much you end up saving - so make sure you know exactly what you are signing up for, and that it suits your income pattern.

Thinking about a shared savings account?

It goes without saying that a joint account can be an excellent way of accumulating savings more quickly, as you can profit from a more rewarding interest rate by depositing double the money at the outset.

The downsides bear some mention too: open up an account with someone you can't fully trust and you could find some strange transactions on your monthly statements. In general shared accounts should be the preserve of loved up couples (preferably married ones).

Anything else you need to know?

One of the most important things to remember is that you shouldn't keep more than £75,000 (or £150,000 for joint accounts) with one bank. This is because this is the maximum amount that will be protected by the Financial Services Compensation Scheme (FPCS). Don't be afraid to have more than one account if it means protecting your money.

Our recommendations

Nationwide

In an era of generally low interest rates, Nationwide are probably the best of the bunch. With their savings accounts you can get a fixed bond interest rate of 0.8% - but they are extremely rigid about early withdrawals. If you need "instant access" to your funds you can still find a pretty generous rate of 0.25% with Nationwide.

Santander

Santander have a largely positive reputation among users - partly because there's plenty of scope for integration with your current account. Interest rates are a little lower than Nationwide at the moment though: for a fixed bond you can expect up to 0.6%, while an instant access account will only accrue 0.1% for small and medium sized savings.

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