Using a Current Account for Saving

There are no regulations to forbid the use of a current account as a savings account. However, there may be maximum limits set on the account balance and interest rates are often only paid on a limited amount of your account balance (see Interest Rates). For example, the first two thousand pounds in your account may be eligible for an interest rate of three and a half percent, whilst any excess funds receive just 0.1 % interest. For long-term saving and investment, it is advisable to open a savings account, which will generally offer higher interest rates and thus allow your money to grow at a faster rate. Cash ISAs are also available, offering tax-free high interest saving. They also offer a stable interest rate in line with the base interest rate set by the Bank of England. For more information see article ISAs. Nevertheless, the benefit of saving in a current account is that the money is instantly accessible, whereas a savings account may require notice or charge fees when funds are withdrawn.