Where to Put Your Savings: Easy Access vs Notice vs Fixed vs Premium Bonds

The "best" savings account isn't the one with the highest headline rate — it's the one that matches when you'll need the money. Lock away cash you need next month and you'll pay for it; leave a house deposit languishing in a current account and inflation quietly erodes it. Here's how the main options compare.

First, build an emergency fund

Before chasing rates, keep three to six months of essential outgoings somewhere you can reach instantly. That's the job of an easy-access account — boring, liquid and safe. Only once that's in place should you think about locking money away for better returns.

The main types

• Easy-access: withdraw whenever you like; the rate is variable and can change at any time. The home for your emergency fund.
• Notice accounts: you give notice (often 30–120 days) before withdrawing. Usually a slightly better rate in exchange for less flexibility.
• Fixed-rate bonds: lock a lump sum away for a set term (1–5 years) at a fixed rate. Best returns, but you generally can't touch it until maturity.
• Regular savers: pay in a capped amount each month for 12 months, often at an attractive fixed rate. Great for building a habit from your salary.
• Cash ISAs: tax-free interest; come in easy-access or fixed flavours. See our Cash ISA vs Stocks & Shares ISA guide.
• Premium Bonds: no interest at all — instead, a monthly prize draw (more below).

Don't forget tax — and protection

Interest counts toward your Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate, £0 for additional-rate). Go over it and a Cash ISA shelters the rest. Just as important: keep no more than £120,000 with any single banking institution, because that's the per-person limit the FSCS protects if a bank fails (with up to £1.4m covered temporarily for life events like a house sale).

Premium Bonds: the tax-free wildcard

Run by NS&I and backed by the Treasury, Premium Bonds pay no interest. Instead, every £1 bond is entered into a monthly prize draw, and all winnings are tax-free. You can hold between £25 and £50,000. The "return" is a variable prize-fund rate and the odds change over time, so check the live figures on the NS&I site rather than relying on a number you read once. They appeal most to higher-rate taxpayers who've used their PSA and like the tax-free upside.

A simple strategy: the savings ladder

Keep your emergency fund in easy-access, then "ladder" longer-term money into fixed bonds with staggered maturity dates (say, one-, two- and three-year bonds). Something matures each year, giving you regular access while most of your cash earns the higher fixed rates. It's a low-effort way to balance access and return.