The Student Room Group

Current account or savings account?

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(edited 7 years ago)
Original post by annaa2603
Hi guys

Over the past few years I have managed to save up a lot of money. I have a part time job and the money has just been accumulating in my account, I never spend it. On top of that I also have my maintenance grant. I'm 20, at uni, with no responsibilities and living at home. So the amount will only increase.

I have a current account and I've been advised to open up a savings account. I've tried researching but nothing makes sense. What are the advantages of opening a savings account as opposed to a current account? Will I lose my money if i transfer it all to a savings account? What are interest rates all about?

A savings account will give you higher interest rates compared to a current account in most cases. There are exceptions where some current accounts can give up something like 4% interest but they either have minimum deposits or a fee attached, but depending on how much you have that could be worth looking into to.
Unless you put your money in a stocks and shares isa then you wont lose anything.
Have you considered making an appointment with your bank, you can always say no if you dont wish to have anything they offer?
Last post is incorrect. Some current accounts offer higher interest than most instant access savings accounts. But you do have to pay in each month. However you can get around this by yo yoing between accounts each month. You can get slightly better rates if you are happy to lock your money up for fixed terms. Have a look for best rates on http://www.moneysavingexpert.com and compare current accounts like Santander 123 wiyh savings.

Good luck.
Current account lets you withdraw anytime, where as savings account is fixed thus you get no interest if you withdraw before the term ends. Lloyds gives 4% it's pretty good up to £5k balance and Santander gives 3% up to £20k.

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