Regular Monthly Savings Accounts

Where from? Banks, building societies, Yearly Plan from the National Savings Certificate and SAYE Office, Yearly Plan Section, Durham DH99 INS (forms available through post offices)

How they work With most bank and building society schemes, you agree to save a regular monthly amount for at least a year (can be longer). The amount of your capital can't fall and earns interest - the rate can vary. You may be able to make one or two withdrawals a year, but notice - three months, say - is normally required.

Building societies also offer special SAYE schemes; you save a regular monthly amount for five years and earn a fixed return. If you leave the money for a further two years a bonus is added. The return is poor if you cash in before five years is up.

With the National Savings Yearly Plan, you pay a fixed amount each month for a year, and then leave your money invested for a further four years. You earn a fixed return which is reduced if you cash in before five years is up.

Minimum investment SAYE schemes £4 a month. National Savings Yearly Plan - £40 a month. Other schemes - varies, around £10 a month.

Maximum investment SAYE schemes - £40 a month. National Savings Yearly Plan - £400 a month. Other schemes - varies, around £1000 a month.

Tax Returns from SAYE schemes and the National Savings Yearly Plan are tax-free. With other schemes, the return is taxable and paid after the equivalent of basic rate tax has been deducted (and this can't be reclaimed by non-taxpayers).

Good for Imposing the discipline of regular saving. SAYE accounts and National Savings Yearly Plan can be good investments for higher rate taxpayers.

Bad for Anyone who can't commit themselves to regular saving.


Click here for more information on Investments And Tax

Deposit-type Accounts

The best returns from deposit-type accounts are often offered by the smaller building societies. But unless there's a branch, or agency, near you, you'll have to weigh the extra interest against the inconvenience of dealing with the account by post.

WARNING If you withdraw money from a notice account which has been open for less than the full notice period, you could end up with less money than you originally paid in. For example, with a 90-day notice account, you'll find that the full 90-day interest penalty has been deducted. So don't open an account with a long notice period if there's... see: Deposit-type Accounts


More money