Managing your money can be difficult but we have lots of advice to help you navigate often complex systems

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Types of bank accounts

There are many different kinds of bank account available in the UK and it is important to find the right one for your needs. The different type of bank accounts available in the UK include:

  • Current accounts
  • Junior accounts (under 18 accounts)
  • Savings accounts
  • ISAs

Current accounts

Current accounts are mostly used for day-to-day banking. Current accounts can receive wages and benefit payments, pay out direct debits and standing orders, and use a debit card to withdraw money from a cashpoint or pay for items in store or online.

Junior accounts

Junior accounts are bank accounts specifically for people aged under 18. Banks have varying age restrictions on these accounts. An account may be for someone aged 0 to 17, or 11 to 15. Junior accounts provide children aged over 11 with a spending card in their own name, but someone over 18 must set up the account, such as a parent or carer.

There are different types of card available for junior bank accounts. A cash card allows the young person to withdraw money from cash machines but not buy purchases in store or online. Debit cards allow them to use cash machines as well as buy in store and online.

Savings accounts

People traditionally put their savings in a savings account to keep it separate from day-to-day spending money. There is also the opportunity to receive interest on this money so your savings grow each year. However, at present some current accounts offer a higher rate of interest than savings accounts so you may get a better deal by opening a second current account instead.

Savings accounts can be fixed rate or easy access. An easy access account means you can withdraw money from your savings at any time. This is useful in the case of emergencies. Fixed rate savings accounts usually offer a higher rate of interest but lock your money away for a certain amount of time. For example, some accounts will offer 3% interest on savings that cannot be withdrawn for two years. This is a good way of increasing your savings, but you may lose the high interest if you need to withdraw the money earlier.


Individual Savings Accounts, or ISAs, used to be the only way to save tax-free but that is no longer the case. Apart from the very biggest savers, most people can now save tax-free in any bank account. A limited amount of money can be saved in an ISA each financial year, which runs from the beginning of April to the end of March. The amount you can put in an ISA changes each year so if you are a big saver you need to keep an eye out. People can save £20,000 in an ISA for the 2017-2018 financial year. This amount does not include savings deposited in previous years. For example, if a person saved £10,000 the previous year they can still save the additional £20,000 in 2017/18.

Help to Buy ISAs support first time buyers in saving for a deposit for a house or flat. If you withdraw the money to buy your first home, the government will add an additional 25%. You can save £1,200 in the first month and £200 a month after that. However, you can only receive the bonus on savings of up to £12,000, resulting in an additional £3,000.

The Lifetime ISAs (LISAs) launched in April 2017. You can invest £4,000 in a LISA each financial year. LISAs can help people buy their first home or save for retirement. The Government adds 25% of what you save each year. If you save £1,000 in one year the Government will add £250, leaving you with £1,250. The 25% bonus is paid every year, up to a maximum amount of savings of £32,000, until you are fifty. Within the first year of opening the LISA you can make withdrawals, but you need to withdraw all the money and close the account. After the first year if you withdraw money for reasons other than to buy your first home or retire you pay a 25% penalty. 

Bank accounts have different terms and conditions. It is important to read up-to-date advice and information when looking for a bank account to make sure it is right for you. Money Saving Expert and The Money Advice Service provide regular updates about bank accounts, interest rates and offers, and could be a very useful tool in your search.