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Types of savings

There are several types of savings accounts, and choosing the right one will depend on what you're saving for, or the specific savings goal that you want to achieve.

That’s why it can be a good idea to have a number of different savings accounts, with each one for a specific type of saving. For example, you could use one savings account to cover unexpected costs, one to save up for a holiday, one to build up a home deposit, and so on.

Savings accounts tend to differ in three main ways:

  1. Internet
    The rate of interest you'll earn on the funds you deposit
  2. Term
    The length of time you're prepared to tie up your savings
  3. Condition
    Whether you must make regular small deposits, or larger amounts whenever you have a surplus

Here are some common types of accounts, and the sorts of savings goals they can be good for:

Account type Key features Good for?
Instant access savings accounts (sometimes called easy access) Fast or immediate access to your money, but the interest rates offered are often very low. Money you don’t need for day to day expenses, but that you might need at short notice for emergency or unexpected expenses.
Regular or basic savings account Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return. Putting aside a proportion of your monthly income.
Notice accounts You must give notice of your intention to make a withdrawal. Depending on the account, the notice period can range from a few days to as much as 180 days. In return, they can offer more attractive interest rates. Putting away money to meet longer term savings goals.
Fixed rate savings (also called term deposits) Better interest rates than a regular savings account. Your money is ‘locked in’ and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts. Depositing funds that you know you aren’t going to need for a while; can also be suitable for meeting longer term savings goals.

Here are some common types of accounts, and the sorts of savings goals they can be good for:

Account type Instant access savings accounts (sometimes called easy access) Instant access savings accounts (sometimes called easy access)
Key features Fast or immediate access to your money, but the interest rates offered are often very low. Fast or immediate access to your money, but the interest rates offered are often very low.
Good for? Money you don’t need for day to day expenses, but that you might need at short notice for emergency or unexpected expenses. Money you don’t need for day to day expenses, but that you might need at short notice for emergency or unexpected expenses.
Account type Regular or basic savings account Regular or basic savings account
Key features Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return. Often come with rules about minimum monthly deposits, or maximum withdrawals, but may offer a slightly higher interest rate in return.
Good for? Putting aside a proportion of your monthly income. Putting aside a proportion of your monthly income.
Account type Notice accounts Notice accounts
Key features You must give notice of your intention to make a withdrawal. Depending on the account, the notice period can range from a few days to as much as 180 days. In return, they can offer more attractive interest rates. You must give notice of your intention to make a withdrawal. Depending on the account, the notice period can range from a few days to as much as 180 days. In return, they can offer more attractive interest rates.
Good for? Putting away money to meet longer term savings goals. Putting away money to meet longer term savings goals.
Account type Fixed rate savings (also called term deposits) Fixed rate savings (also called term deposits)
Key features Better interest rates than a regular savings account. Your money is ‘locked in’ and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts. Better interest rates than a regular savings account. Your money is ‘locked in’ and inaccessible for a fixed period of time, from a few days to several years. They usually require a minimum investment, and there will be a penalty for securing early access to your money. They offer higher interest rates than many other savings accounts.
Good for? Depositing funds that you know you aren’t going to need for a while; can also be suitable for meeting longer term savings goals. Depositing funds that you know you aren’t going to need for a while; can also be suitable for meeting longer term savings goals.
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HSBC has created the YourMoneyCounts financial wellness program which is presented by HSBC staff to the community in a classroom setting. Participant workbooks covering Budgeting, Credit, and Identity Theft and a budgeting worksheet are found through the YourMoneyCount link above. This program was created in partnership with the national nonprofit Greenpath Financial Wellness,  and they provide free individualized support focused on your personal situation and financial wellness.