Types of bank account, explained
What you'll learn
Understand the difference between current and savings accounts and when to use each.
A current account is for everyday money flowing in and out; a savings account is for money you are setting aside. Most people benefit from using both: one for spending, one for storing.
What each is for
- Current account - wages in, bills and card payments out. Easy access, usually little or no interest.
- Savings account - money you do not need right now, earning interest. Some let you withdraw freely, others pay more in return for locking it away.
The simple rule: spending money in the current account, spare money in savings.
How they compare
| Feature | Current account | Savings account |
|---|---|---|
| Main purpose | Day-to-day spending | Storing spare money |
| Interest | Usually very low | Higher |
| Access | Instant | Instant to locked |
| Best for | Bills and card use | Emergency fund and goals |
Choosing a savings type
- Easy-access - withdraw any time, slightly lower rate. Good for an emergency fund.
- Notice or fixed - higher rate, but you give warning or lock the money for a term.
Rates change all the time, so the chart above shows the usual ranking, not real figures. Check that any provider is covered by the FSCS deposit protection.
Key takeaways
- Current accounts are for spending; savings accounts are for storing.
- Leaving spare money in a current account quietly loses value to inflation.
- Easy-access suits an emergency fund; fixed accounts pay more but lock money away.
- Check your bank is FSCS-protected and note the current limit.
Illustrative only: example interest rates to show the usual ranking, not real or current rates. Rates change constantly and vary by provider. Not a forecast.
Frequently asked questions
Can I just keep everything in my current account?
You can, but a current account usually pays little or no interest. Spare money sitting there slowly loses value to inflation, so a savings account often suits money you do not need day to day.
What is the difference between easy-access and fixed savings?
Easy-access lets you withdraw any time, usually at a lower rate. Fixed or notice accounts pay more but lock the money away or require warning before withdrawal.
Is my money safe in a UK bank?
Eligible deposits at UK-authorised banks are protected by the FSCS up to a per-person, per-institution limit. Check the current limit and that your provider is covered.
General information, not financial advice. The value of investments can fall as well as rise, and figures and rules can change; check the current position before acting.