A guide to flexible savings accounts

Saving money is an important financial habit to develop. It helps build security, provides a safety net for unexpected expenses, and helps you achieve both short and long-term financial goals.

 

You could be planning for the future. Or saving a safety net for unforeseen costs. Or putting money aside to treat yourself to something big. Whatever you're saving for, choosing the right account for you can give you control over your finances and peace of mind.

 

Flexible saving 

We all know that things in life can change. So having some flexibility in your approach to saving can be crucial in helping you manage shifting financial circumstances.  

 

Unlike traditional savings methods, which may have fixed deposits or withdrawal penalties, flexible savings offer greater control. They allow you to adjust contributions and access funds as needed, without strict restrictions. This makes it easier to manage unexpected expenses and shifting priorities while maintaining consistent savings. 

 

What is a flexible savings account? 

A savings account with certain flexible features can suit certain types of savers. For example, you may want flexibility when it comes to how much and how often you can pay into your account. Or you may want to avoid limitations on how often you can withdraw money.  

 

Interest rates on savings accounts with flexibility may be lower than fixed-rate accounts. But they can provide different advantages; like no fixed deposits, minimal penalties, and no lock-in periods. 

 

Types of flexible savings accounts 

Flexible savings accounts can look like: 

 

• Easy access acounts: these allow you to easily deposit and withdraw money, usually without penalties or fees. This gives you the flexibility to access your savings whenever you need.  
• Flexible cash ISAs: a type of tax-free savings account that lets you withdraw and replace money within the same tax year without affecting your annual ISA allowance. 
• Instant access accounts: these provide immediate access to your money funds with no withdrawal limits. These can be suitable for people who want to be able to access their savings with no limits at all, though interest rates tend to be lower. 

What are the benefits of flexible savings accounts? 

Flexible savings accounts can work well if you’re looking to save while maintaining access to your funds. That might be for emergencies, short-term goals, or fluctuating expenses. The main advantages include:

 

• Ease of access – Flexible savings accounts offer easy access to funds, unlike fixed-term accounts that can impose penalties for early withdrawals.  
• Flexible deposits and withdrawals – Allow you to save at your own pace - you can deposit money whenever you have extra funds and withdraw when needed without worrying about restrictions. 
• Potential for earning interest – Some flexible savings accounts offer interest on deposits, helping your money grow over time. Interest rates aren’t always as high as fixed-term accounts but still offer passive income while keeping savings accessible. 
• Opportunity for tax-free savings – Flexible ISAs allow savers to earn interest without paying tax on their savings. This makes them an attractive option for those looking to maximise returns. 
• Ideal for emergencies and short-term goals – Because of their accessibility and adaptability, these accounts are well-suited for emergency funds, helping cover unexpected expenses like car repairs, home maintenance, or job loss. They’re also great for short-term savings goals, such as planning a holiday. 

Flexible or fixed savings: Which is right for you? 

Understanding the differences between flexible and fixed savings accounts can help you make an informed decision that’s right for your needs. 

Flexible savings	Fixed savings
Offers easy access   Adaptable deposits/withdrawals	Requires locking in funds for a set period  Often with restrictions on deposits and withdrawals
Access to your money during the term; either unlimited withdrawals or a set amount of withdrawals allowed	Early withdrawals may incur penalties
Variable interest rates that can fluctuate  Typically offer lower interest rates than comparable fixed-rate accounts on the market	Can sometimes offer a higher interest rate compared to flexible savings options  Your funds are locked for a fixed term
No fixed commitment  Deposits and withdrawals are flexible	Involves committing funds for a fixed duration - typically months or years   Certain limitations or conditions
Typically used for emergency funds, short-term savings and variable income management	Typically used for emergency funds, short-term savings and variable income management

 

A flexible savings account may be more suitable if you need easy access to your money. This could be for things like emergencies, unexpected expenses, or to manage a variable income. It offers flexibility to deposit and withdraw when you want, making it a good option for short-term savings, especially if accessibility is a higher priority than earning interest.   

 

Alternatively, if you can leave your money untouched for a set period, fixed savings accounts typically offer higher interest rates. These are better suited to long-term goals, like a home deposit or retirement, and work well if you already have an emergency fund so don’t need immediate access to your savings. 

 

If you’re after both accessibility and long-term growth, you might want to consider a mix of the two - keeping some funds in a flexible savings account for emergencies and allocating the rest in a fixed savings account for higher returns. 

 

Choosing the right flexible savings account 

Choosing the right flexible savings account depends on your financial goals, how often you need to access your money, and whether you prefer fixed or variable interest rates.  

 

Easy access and instant access accounts offer the most flexibility, while regular saver accounts help build disciplined savings with structured deposits. If you want to boost tax-free savings, a flexible Cash ISA could be a great option.  

 

At Principality Building Society, we offer a range of savings accounts to suit different needs, whether you're building an emergency fund, saving for a big purchase, or growing your money over time.