Small savings account

barbatiman

I would like to deposit £1000 and then add £100 every month for 2 years with no withdrawals needed.
Which savings account/ISA would suit me best please?

ColdIron

Any easy access ISA would do, perhaps a notice account. We don't know your circumstances but a LISA could suit

https://moneyfactscompare.co.uk/isa

Do you need an ISA? If you don't pay tax on your interest you won't get much benefit. You have a Personal Savings Allowance that could cover the first £1,000 of tax

The best for me would be the one that pays the highest interest rate but we know nothing about you

refluxer

barbatiman said:

I would like to deposit £1000 and then add £100 every month for 2 years with no withdrawals needed.
Which savings account/ISA would suit me best please?

If you don't pay tax on your savings (ie. are a low earner and/or don't currently exceed your Personal Savings Allowance and aren't likely to in the future) then a 2 year fixed rate account for the £1000 and a high-paying (preferably fixed rate) Regular Saver account that accepts £100/month would probably get you the best return, if you think interest rates will continue to fall. As most Regular Saver accounts run for 12 months, you could put the matured funds from the first year into a 1 year fixed rate account and take out a second Regular Saver for the second year.

If you do pay tax on your savings and would benefit from an ISA, then, as suggested above, a high-paying easy access cash ISA would be one option, or a 2 year fixed rate cash ISA for the £1000 (as those accounts have relatively small funding windows) and an easy access ISA for your monthly payments (you don't tend to get Regular Saver ISA accounts) would be another option.

Just be very wary about the top-paying easy access cash ISAs at the moment (Trading 212, Plum, Chip etc), as some have quirks and restrictions that you don't usually get with that type of account.  

barbatiman

Thank you. Is that 2 separate accounts? One for the £1000 deposit and another for the £100 per month?
Is there not a savings account that can do both things?

Emmia

barbatiman said:

Thank you. Is that 2 separate accounts? One for the £1000 deposit and another for the £100 per month?
Is there not a savings account that can do both things?

You could just open a standard savings account with the £1000 and then add to it. Picking the highest interest rate. 

Is this money you need in ~ 2years or is this the start of building a pot of savings over say, 5-10years?

refluxer

barbatiman said:

Thank you. Is that 2 separate accounts? One for the £1000 deposit and another for the £100 per month?
Is there not a savings account that can do both things?

If you want the simplest option, then an easy access account (either ISA or non-ISA) will accommodate both of those things. The main advantage to this type of account is that your money will always be accessible but the disadvantage (when interest rates are falling) is that it will have a variable (not fixed) rate of interest and therefore the rate will most likely follow the Bank of England base rate to some extent which means if interest rates continue to fall as predicted, then so will the interest rate for that account. If interest rates were to rise however, then there's a chance you could end up better off than if you'd opened fixed rate accounts - this is all part of the gamble of deciding between variable and fixed rate accounts. 

If you want the best possible return for your money, you don't need access to it and you think that interest rates are going to continue to fall, then the best option is likely to be to open different accounts - a fixed rate bond for your £1000 lump sum and a Regular Saver for your £100/month, as I mentioned above. If both of those accounts are fixed rate accounts (some Regular Savers are variable), then the interest rate won't decrease if the Bank of England base rate decreases. The best Regular Saver accounts pay the highest rates of interest (ie. 7.5% vs 4.5% in an easy access account) and, as payments into Regular Savers are restricted, they are ideal for when you have funds available on a monthly basis.  

Because the best Regular Saver accounts pay so much more than the best easy access accounts, you're not likely to be worse off with a fixed RS account if interest rates were to rise but this is less certain for a fixed rate bond account, as they are currently paying around the same (or slightly less) than the best easy access accounts.