A new tax year will start in April and the choice of savings deals has recently ballooned – meaning now could be a good time for some people to start the search for a new savings account.
And with the Bank of England base rate having been reduced to 4.5% in February, it’s worth households checking whether the rates on the accounts they hold have been trimmed back.
Savers in a poor-paying account may want to switch to a better deal, particularly with the eroding impacts of inflation on their returns. Consumer Prices Index (CPI) inflation recently rose to 3%, surpassing analysts’ expectations.
On the plus side, there is at least a good amount of choice. Financial information website Moneyfacts recently reported that the number of savings accounts on the market, including Isas, reached the highest point in February since its records started in 2007, with 2,157 savings deals available.
There are also strong signs of an appetite among people to start a savings habit this year.
New research from Marcus UK by Goldman Sachs reveals that nearly a third (34%) of people plan to save more in 2025 – and 31% will try to spend less.
Young adults are particularly keen to save, the research indicates, with nearly half (46%) of under-35s in the survey planning to save more in 2025, compared with less than one in five (18%) over-55s.
Spending regrets from last year may be one motivation behind people looking to save more and spend less in the months ahead.
A third (34%) of the 2,000 people surveyed across the UK regret a purchase decision made last year, increasing to over half (58%) of 18 to 34 year-olds.
The biggest spending regrets from 2024 across the survey included clothes, household items that turned out not to be needed and takeaways and food deliveries.
Another motivation for building a savings pot could be to have the security of a financial cushion.
More than two-fifths (43%) of people surveyed say they worry about money a lot.
Rob Basinger, head of product and marketing at Marcus by Goldman Sachs, says: “It’s positive to see that UK consumers are re-assessing how they can manage their money better in 2025.”
He adds: “It’s essential consumers choose the account that best fits their needs and to consider factors like any fees, charges, and withdrawal restrictions before deciding.”
To help people maximise their savings and select the best savings account for their own needs, Basinger suggests firstly considering the different types of account that are available.
Easy access accounts, for example, could be ideal if there’s a chance you might need to withdraw a big sum of money without needing to give your account provider any notice, for example if your car or boiler urgently needs fixing.
If someone is building a pot by adding small amounts into it on a regular basis, rather than having a big lump sum to put away in one go, a regular savings account could be another option.
“If you like to add cash to your savings on a regular basis, these accounts may require you to make a deposit every month,” says Basinger.
Interest rates on these accounts may be fixed or variable, but if someone wants certainty over their returns they could opt for a fixed-rate savings account.
Basinger says: “You’ll know exactly how much interest you’ll earn over that period, but usually access to money is restricted.”
ISAs can be a good option to grow a savings pot, as money held in them is ring-fenced from the taxman.
Savers may want to have a combination of different types of account for different purposes.
There are also some potential pitfalls to avoid when comparing savings deals.
Basinger says that when shopping around for savings rates, make sure you’re comparing like with like. Some rates may be expressed as AER (annual equivalent rate) and some may be gross rates.
Fees and charges could also eat into your returns, so be aware of these, he adds.
Basinger says it’s also important to check if there are any restrictions when it comes to taking your cash back out.
He says: “Understand any limitations on accessing your money to avoid unexpected issues when withdrawing your money.”
Also, be aware of any limits to how much you can save. Regular savings accounts, for example, may have a maximum on the amount you can deposit each month.
If you have an employer, it may also be worth asking if they operate any savings schemes.
Peter Briffett, founder and CEO of employee benefits provider Wagestream says: “One shift we’re seeing is that more and more are now saving through a workplace savings scheme – often referred to as ‘payroll savings’.
“Around two million Wagestream members in the UK, for example, are now able to set aside savings straight from their payslip.”
A new survey commissioned by Wagestream indicates that nearly two-thirds (62%) of people don’t know what the interest rate on their savings is.
Women are nearly twice as likely (20%) as men (11%) to have nothing put by in a savings account, researchers found.
Some people in Wagestream’s research say having savings would make them feel proud of themselves and some agree they would feel more optimistic.
