What is Open Banking?

Open Banking is a set of rules that require banks to let you share your financial data with authorised providers, such as money management apps or websites.

By doing so, you can give these providers read-only access to your spending transactions, regular payments, and account balance. 

The idea behind this is to make it easier for other organisations to use your data to personalise their products or provide suggestions on areas where you can save.

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How is Open Banking Used?

Open Banking has paved the way for a variety of useful ‘money management’ websites and apps. These can use your financial data to offer you a personalised service or make recommendations on ways to save based on your spending habits. 

For example, automatic savings apps analyse your current account data, such as your available balance, and calculate how much you can afford to save. The app then moves the calculated amount into a savings account automatically.

Additionally, Open Banking has made online payments more convenient and secure. Certain online retailers can now connect directly to your bank, eliminating the need to fill out your card details. 

HMRC also offers a ‘pay by bank account’ Open Banking option for a number of tax bills, such as self-assessment tax returns, Capital gains, and Stamp duty. Learn more here.

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Is Open Banking Safe?

With all the data being accessed and payments being made, it's natural to wonder if Open Banking is safe. 

As long as providers are authorised and have the relevant FCA permissions, they can only access data needed for the service you’ve signed up to.

This means that if you've asked a provider to look at your current account with one bank, they wouldn’t be able to look at your credit card details with that bank without your permission.

Moreover, all providers must comply with data protection rules, including UK GDPR. Before you sign up, the provider should tell you which data they will use, how long they will keep it, and what they will do with it. 

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How does Open Banking work?

Each provider will ask for your consent to access your information when you sign up. They will then send a request to your bank, which will process and share your details through secure technology called application programming interfaces (APIs). 

APIs simply allow two providers to ‘talk’ to each other and pass on the information you’ve given permission to share, such as your bank balance and regular payments.

You can also withdraw your permission at any time. Additionally, providers are required to get renewed permission from you every 90 days, which gives you the opportunity to rethink whether you want to continue using that provider.

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Open Banking Summary

In conclusion, Open Banking is generally considered to be a safe and convenient way to share your financial data with authorised providers. 

With the variety of useful apps and websites available, it can help you manage your money more effectively and make online payments more secure. Remember, if you’re unsure about anything, always ask before giving access.

For millions of people, podcasts are a valuable source of information and entertainment, covering a wide range of topics. It is unsurprising, therefore, that a number of them focus on finance and money management. 

Whether you're looking to learn about budgeting, investing, or staying updated on economic trends, podcasts offer a convenient way to access expert insights and advice. Below are some of the best finance podcasts in the UK that cater to both beginners and seasoned savers alike.

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Money Box

Money Box, from BBC Radio 4, is a longstanding podcast that delves into various financial issues affecting individuals and businesses across the UK.

Hosted by Paul Lewis, it covers everything from pensions and mortgages to consumer rights and tax implications. Each episode features in-depth analysis, interviews with experts, and practical advice, making it a reliable resource for staying informed about personal finance matters.

Listen here

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The Martin Lewis Podcast

Hosted by finance guru Martin Lewis, the man behind MoneySavingExpert, this podcast aims to answer financial questions from listeners, offering valuable money-saving tips and simple, easy to grasp guidance. 

Listen here

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The Meaningful Money Personal Finance Podcast

Hosted by Pete Matthew, this podcast is — as the name suggests — dedicated to giving listeners the knowledge and skills to make informed financial decisions.

Pete covers essential topics such as budgeting, saving, investing, and planning for retirement in a straightforward and accessible manner. Whether you're just starting your financial journey or looking to enhance your money management skills, this podcast offers practical tips and tangible, actionable advice.

Listen here

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The Property Podcast

Hosted by property experts Rob Bence and Rob Dix, this podcast focuses on the UK property market and property investment strategies.

Whether you're a first-time buyer, seasoned investor, or simply interested in the real estate sector, it provides insights into buying, selling, and managing property. Episodes include discussions on market trends, property financing, and tips for successful property investments, making it a valuable resource for anyone looking to navigate the complexities of property ownership.

Listen here

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The Money To The Masses Podcast

Hosted by Damien Fahy, The Money To The Masses Podcast offers practical advice on personal finance, investing, and money-saving strategies.

Released every Sunday, Damien breaks down complex financial topics into easily understandable concepts, providing listeners with actionable insights to improve their financial wellbeing. 

Listen here

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The Rest is Money

Produced by podcast giants Goalhanger, the company behind The Rest Is Politics, We Have Ways of Making You Talk and The Rest Is History, The Rest is Money delves into the stories behind the money, looking at who's making it, who's spending it, and who's investing it.

Hosted by Robert Peston and Steph McGovern, each episode offers valuable insights into navigating the complexities of the financial landscape.

Listen here

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Money Clinic with Claer Barrett

Hosted by the FT’s money-making expert Claer Barrett, this podcast responds to real-life money questions from a range of guests — predominantly millennials — who are gearing up to battle the cost of living crisis. Each episode contains information, tips and takeaways shared by top FT writers and financial experts. 

Listen here

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Why listen to finance podcasts?

Finance podcasts provide a wealth of information and insights that can help you enhance your financial literacy and make better, more informed decisions about money management.

Whether you're looking to learn about investment opportunities, save for retirement, or simply improve your financial habits, podcasts offer a convenient way to access expert advice and stay updated on the latest trends in finance.

In this guide, we’ll look into what the Annual Equivalent Rate is, its significance in calculating interest, and how it differs from stated interest rates. By the end, you'll have a clear understanding of the AER and its implications for your savings.

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What Is the Annual Equivalent Rate (AER)?

The Annual Equivalent Rate, commonly known as AER, represents the estimated interest rate you would earn on your savings over the course of a year, assuming the interest is compounded and paid annually. 

It takes into account the frequency of interest payments and provides a standardised measure to compare different savings accounts or investment products on an equal footing. Interest rates explained here.

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How is AER calculated with monthly compounding interest?

When it comes to calculating the Annual Equivalent Rate (AER) with monthly compounding interest, it’s important to know the formula that’s used to calculate this. 

AER =[(1 + (Monthly Interest Rate))^12] - 1

Here’s a breakdown of calculating AER with compounding interest formula: 

Monthly Interest Rate: This is the nominal interest rate offered by the account, expressed as a decimal and divided by 12 (since there are 12 months in a year).

(1 + Monthly Interest Rate): This represents the factor by which your money grows each month. It's 1 plus the monthly interest rate.

^12: This exponent represents the number of compounding periods in a year (12 months).

- 1: Finally, subtracting 1 from the result gives you the AER, which is the annualised rate that takes into account the effect of monthly compounding.

Using this formula, you can calculate the AER for an account with monthly compounding interest and compare it to other accounts with different compounding frequencies to make more informed decisions about your savings.

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How does AER work?

For this example, imagine if you want to deposit £10,000 into a savings account. Account A offers an interest rate of 3.9% paid monthly, whilst account B offers 4% interest paid annually. 

Account A (3.9% interest paid monthly with compounding):

Calculate the AER for Account A:

• AER accounts for the effect of monthly compounding.
• Using the formula: AER = [(1 + Monthly Interest Rate)^12] - 1
• AER for Account A is approximately 4.01%.

Interest earned in one year with Account A:

With a £10,000 deposit, you'd earn around £401 in interest over one year.

Account B (4% interest paid annually):

Since the interest is paid annually for Account B, the AER is equal to the nominal interest rate.

Interest earned in one year with Account B:

With a £10,000 deposit, you'd earn £400 in interest over one year.

Comparison:

• Account A has an AER of approximately 4.01% due to monthly compounding, and you'd earn around £401 in interest over one year.
• Account B offers a flat 4% interest rate, and you'd earn £400 in interest over one year.

In summary, even though Account A has a slightly lower nominal interest rate (3.9% monthly with compounding), its AER is slightly higher due to the effect of monthly compounding.

This results in competitive earnings compared to Account B, which offers a higher flat annual interest rate (4%). Check best interest rates for savings accounts.

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Annual Equivalent Rate vs. Stated Interest

The AER differs from the stated interest rate in that it takes into account the frequency of compounding. 

While the stated interest rate only represents the interest percentage applied to your principal amount, the AER considers the compounding effect and provides a more accurate reflection of the potential returns on your savings.

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Advantages and Disadvantages of the AER

AER offers several advantages:

• Comparability: The AER provides a standardised measure that allows you to compare different savings accounts or investment products on an equal footing, considering the compounding effect.
• Accurate interest calculation: By using the AER, you can estimate the actual returns on your savings over the course of a year, taking into account how often interest is added to your account.‍
• Informed decision-making: With the AER, you can make more informed decisions about where to allocate your savings, as it provides a clearer picture of the potential growth of your money.

However, it's important to be aware of potential limitations:

• Varied compounding periods: Different financial institutions may compound interest at different frequencies, making it crucial to compare AERs for accurate comparisons.‍
• Changing interest rates: The AER assumes that interest rates remain constant over the year, which may not be the case. It's essential to consider the impact of potential interest rate fluctuations on your returns.

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AER Summary

The Annual Equivalent Rate (AER) is a vital tool for accurately comparing interest rates on savings accounts and investment products. By understanding the AER and its significance in calculating interest, you can make more informed decisions about where to grow your savings. 

Remember to consider the AER alongside other factors such as account terms, compounding periods, and potential interest rate fluctuations when evaluating your savings options. See Chip savings accounts.

What is laddering?

Laddering is the practice of dividing your savings across several fixed-term accounts or bonds with varying maturity dates. Instead of locking up all your money in one long-term account or keeping it entirely in easy access savings, you spread it across multiple terms.

This allows you to benefit from better interest rates while ensuring a steady flow of accessible funds.

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How does it work?

Imagine you have £10,000 to save. Instead of placing it all in a single account, you could, as an example, split it like this:

• £2,000 in a one-year fixed-term account
• £2,000 in a two-year fixed-term account
• £2,000 in a three-year fixed-term account
• £2,000 in a four-year fixed-term account
• £2,000 in a five-year fixed-term account

As each account matures, you would then have the option to access the money or reinvest it in a new five-year account, thus maintaining the ladder.

This way, you will be continuously cycling your savings, while simultaneously benefiting from higher interest rates on long-term accounts.

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How to start laddering

Before you start building your ladder, you’ll need to plan ahead:

• ‍Evaluate your needs: Decide how much you can afford to lock away for longer terms and how much (if any) you’ll need to access in the near future.‍
• Compare rates: Understand the best fixed-term savings rates.
• ‍Start small: You don’t need a huge lump sum to get started. Begin with what you have and build your ladder over time.
• ‍Stay updated: Monitor interest rate trends and economic conditions to make informed decisions when your accounts mature.
• ‍Understand tax implications: Be mindful of how your interest earnings might impact your tax liabilities, especially if you’re in a higher tax bracket.

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Is laddering right for you?

Laddering can be a great option if:

• You have a lump sum to invest;
• You want to maximise your savings’ interest without sacrificing liquidity;
• You’re comfortable managing multiple accounts;
• You have a stable financial situation and can afford to lock away part of your savings;
• You need instant access to all your money or are just starting your savings journey, an easy-access savings account may be more appropriate for now.

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The bottom line

Laddering is a simple but effective strategy that helps you strike a balance between earning potential and maintaining flexibility.

Whether you’re looking to grow your savings or ensure regular access to funds, this method could be a game-changer for your financial future.

Of course, it’s important to always keep in mind that personal finance is unique to each individual, and what works for one person might not be the best fit for another. Take the time to assess your goals, risk tolerance, and financial needs before implementing laddering in your savings plan.

Please note: Chip only offers savings and investment products, which are listed in its app and website. Chip does not provide financial or tax advice, and this information should not be considered a personal recommendation.

When it comes to managing your money, understanding the rules surrounding tax on savings interest is essential for making informed financial decisions.

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Understanding savings interest and tax

Savings interest refers to the money you earn from your savings accounts, which can include standard savings accounts, fixed-term savings, and cash ISAs (Individual Savings Accounts).

The interest you earn may be subject to tax, but there are several factors that determine whether you need to pay tax on your savings interest.

Please note that Chip does not offer tax or financial advice, and this should not be considered as a personal recommendation. Tax treatment depends on individual circumstances and may be subject to change in the future.

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Personal Savings Allowance (PSA)

The UK government introduced the Personal Savings Allowance (PSA) in April 2016. The PSA allows most people to earn a certain amount of interest tax-free each year. The allowance you receive depends on your income tax bracket:

• Basic rate taxpayers (20% tax bracket): You can earn up to £1,000 in interest tax-free
• Higher rate taxpayers (40% tax bracket): You can earn up to £500 in interest tax-free
• Additional rate taxpayers (45% tax bracket): You do not receive a personal savings allowance.

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Individual Savings Accounts (ISAs)

One of the most effective ways to save tax-free is through an ISA. There are different types of ISAs — Stocks and Shares ISA, Lifetime ISA (LISA) and Junior ISA (JISA), to name three — but the most relevant for savers are cash ISAs. 

The interest earned in a cash ISA (as with all other ISAs) is completely tax-free, regardless of your earnings, or how much you have saved in your ISA. Each tax year, you can save up to £20,000 tax-free, but most ISA accounts do not have a limit in terms of how much you can accumulate in total over the years. 

Your annual ISA allowance of £20,000 can be placed in just one ISA or can be spread a number of them.

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Do you have to pay tax on your savings?

Whether you have to pay tax on your savings depends on the total interest you earn and the allowances available to you. Here are a some scenarios to showcase these variables:

1. Earning interest below the PSA: If the interest you earn from your savings is within your PSA, you won't have to pay any tax on it. For example, if you are a basic rate taxpayer and you earn £800 in interest, this is within the £1,000 PSA, and no tax will be due.
   
2. Earning interest above the PSA: If your interest earnings exceed your PSA, you will have to pay tax on the amount above the allowance. For instance, if you are a higher rate taxpayer and earn £600 in interest, you will need to pay tax on the £100 that exceeds your £500 allowance. This, as noted in the previous section, is not the case for money saved in an ISA.
   
3. Interest earned in ISAs: Any interest earned within an ISA is tax-free, and it doesn't count towards your PSA. This means you can maximise your savings by utilising ISAs effectively.

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How do you pay tax on savings?

If you do need to pay tax on your savings interest, HMRC will usually collect it automatically. This, however, is not always the case. Here’s how it works:

• Through PAYE (pay as you earn): If you're employed or receive a pension, any tax due on your savings interest can be collected through the PAYE system. Your tax code will be adjusted to reflect the interest earned and the tax due.
  
• Self-assessment tax return: If you complete a self-assessment tax return, you’ll need to include the interest earned on your savings. HMRC will calculate the tax that is due and notify you of both the need to pay tax, and when it needs to be paid by.

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When do you pay tax on savings?

Tax on savings interest is generally due at the end of each tax year, which runs from April 6th to April 5th of the following year. If HMRC collects the tax through PAYE, adjustments will be made throughout the year.

For those filing a self-assessment tax return, the deadline for submission and payment is usually January 31st following the end of the tax year.

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How to maximise your tax-free savings

To maximise your tax-free savings, it’s essential to understand how to strategically utilise your annual annual allowance, and put your money in accounts that will earn you the highest amount of interest.

1. Utilise your ISA allowance: Ensure you make the most of your £20,000 ISA allowance each tax year. Even if you only have a small amount to save, using your ISA can, potentially, provide you with tax benefits over the longer term.
   
2. Monitor your interest: Once you have maxed out your ISA allowance, keep track of the interest earned across all your savings accounts to ensure you stay within your PSA.
   
3. Consider high-interest accounts: If your savings are substantial, explore high-interest accounts and ISAs to maximise returns while minimising your tax liabilities.

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Conclusion

Whether or not you have to pay tax on your savings in the UK depends on your individual circumstances. This should not be seen as tax advice and you should seek independent advice if unsure on your tax status.

‍The PSA provides a buffer for tax-free interest, and ISAs offer a valuable means of saving without tax implications. By understanding and utilising these allowances and tax-free savings accounts, you can maximise your tax-free savings.

Interest rates and inflation are closely linked in the UK economy. Inflation, measured by the Consumer Price Index (CPI) and the Retail Price Index (RPI), is the rate at which the prices of services and goods are rising.

The Bank of England (BoE) is responsible for setting the base rate to help control inflation and maintain price stability.

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What Causes Inflation?

When the BoE raises interest rates, borrowing becomes more expensive. This can slow down economic growth and curb inflation. This is because higher interest rates make it more expensive for businesses to borrow money, which leads to slower growth and fewer job opportunities. 

Consumers also have less money to spend because they are paying more interest on loans and mortgages. As a result, demand for goods and services decreases, which can lead to lower prices.

On the other hand, when the BoE lowers interest rates, borrowing becomes cheaper. This can help stimulate economic growth and fuel inflation. When interest rates become lower, it makes it cheaper for businesses to borrow money, which can lead to more investment and create more jobs. 

Consumers also have more money to spend because they are paying less on loans and mortgages. This means the demand for goods and services increases, which can lead to higher prices. 

Learn more about interest rates here.

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How Does the Bank of England Control Inflation and Interest Rates?

The Bank of England uses monetary policy to control inflation and interest rates. The bank sets interest rates, which influence the cost of borrowing and the rate of growth in the money supply.

• When inflation is too high, the bank raises interest rates to reduce spending and slow down the economy.
• When inflation is too low, the bank lowers interest rates to encourage spending and growth.

The bank also uses other tools, such as quantitative easing, to influence the money supply and control inflation.

Quantitative easing (QE) is a monetary policy used by central banks to stimulate the economy by increasing the money supply and lowering interest rates.

This is typically done by purchasing government bonds or other financial assets from banks, which increases the banks' reserves and makes it easier for them to lend money.

The goal of QE is to encourage spending and investment, which can help boost economic growth and reduce unemployment.

This can help to stimulate economic growth and curb inflation by making it cheaper for businesses and consumers to borrow money.

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What You Need To Remember

When interest rates are high, borrowing becomes more expensive and can slow down economic growth whilst curbing inflation. When interest rates are low, borrowing becomes cheaper and can stimulate economic growth. 

Learn more about how our instant access savings account.

An Instant Access Account is a type of savings account that allows you to deposit and withdraw your money whenever you need it, without incurring any penalty charges. 

It is an easy-to-use and flexible savings option that generally offers a higher interest rate than a standard current account.

In the UK, Instant Access Accounts are offered by various banks, building societies and other financial providers. They can be opened online, over the phone or in person at a branch (depending on the provider).

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What are the benefits of an instant access Account?

1) Flexibility

One of the main benefits of an Instant Access Account is its flexibility. 

You can deposit or withdraw money from the account whenever you need it, usually without any restrictions or penalties. This makes it a great option for those who need easy access to their savings.

2) Competitive interest rates

Instant Access Accounts usually offer a higher interest rate than standard current accounts, which means you can earn more money on your savings.

However, the interest rate is generally lower than fixed-term savings accounts, which require you to lock your money away for a set period of time. Different types of savings accounts.

3) No penalties

Unlike some other savings accounts, there are usually no penalties for withdrawing money from an Instant Access Account. You can usually make as many withdrawals as you like, without incurring any charges. 

This does, however, depend on the savings account provider and their terms and conditions of the account. 

4) Protection

Your savings in an Instant Access Account are protected by the Financial Services Compensation Scheme (FSCS), which means that if the bank or building society held in the UK goes bust, you will be protected up to £120,000 per person, per institution. 

Please note that FSCS is subject to eligibility and limits apply. For more information, please visit: https://www.fscs.org.uk/check/ 

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How to choose the right Instant Access Account?

When choosing an Instant Access Account, it’s important to compare the interest rates offered by different banks and building societies.

You should also consider any additional features, such as charges that may or may not apply.

It’s also important to check whether the bank or building society is covered by the Financial Services Compensation Scheme, which provides protection for your savings in the event of the institution going bust.

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Instant Access Account Summary

In conclusion, an Instant Access Account is a flexible and convenient savings option that offers competitive interest rates and easy access to your funds.

It’s a great choice for those who need to save money but also need access to their funds whenever they need it. 

By choosing the right Instant Access Account, you can make your money work harder for you, while also enjoying the peace of mind that comes with knowing your savings are protected under FSCS (subject to eligibility)

Remember to always do your research when comparing instant access accounts and that you’re fully aware of any terms of conditions when opening an account with a provider.

When it comes to saving money, it’s always important to choose an option that’s right for you. Understanding the different options available can help you choose the best account for your own savings goals.

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Easy Access Savings Accounts

‍These accounts are ideal for those who want to save money and earn interest on their savings, but also enjoy access to their money at any time. They allow customers to deposit and withdraw money at will, usually with no penalty. See our Chip Easy Access account.

Interest rates tend to be variable and can be changed at any time (usually with a notice period from the bank). They are a great option for getting interest on money you may want to spend immediately or may need to use because of an unforeseen expense.

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Cash ISA

‍An ISA (individual savings account), is a type of tax-free savings account that is available to UK residents. They allow customers to save money without having to pay tax on the interest earned. 

They can be a great way to save for the long term and make the most of your money should earnings from other savings accounts mean you max out your personal savings allowance.

Find out more about our Cash ISA

Chip does not provide tax advice. Tax treatment depends on individual circumstances and may be subject to change in the future.

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Regular Savings Accounts

‍A regular savings account is designed for customers who are looking to save a fixed amount of money on a regular basis. They tend to offer higher interest rates than other types of savings accounts in return for regular deposits. Calculate your savings goal.

They are a good option for those who want to save smaller amounts of money, but may not have a lump sum to deposit. However, there are usually restrictions on how much you can deposit and the number of withdrawals allowed, and customers may have to pay a penalty to access their funds. More savings accounts.

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Children’s Savings Accounts

‍These savings accounts are for children under the age of 18 and tend to offer higher interest rates than other types of savings accounts. 

They are a great way for parents to help their children save money and learn about personal finance or for parents to start putting money aside for their children's future. Many children’s savings accounts also come with educational resources to help kids learn about saving and managing money.

Not available with Chip

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Fixed Rate Savings Accounts

‍These accounts offer customers a fixed interest rate for a set period of time. This is usually between one to five years. This type of account is ideal for those who want to lock in a high-interest rate and can leave their money untouched for a set period.

Fixed-rate savings accounts are ideal for people who want to save for a specific goal, such as a down payment on a house or a vacation. However, customers may not be able to access their funds during this period without incurring a penalty.

Not available with Chip

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Remember When Choosing a Savings Account

When looking for the right savings account, it’s important to consider the interest rate, any fees or penalties and any restrictions on deposits and withdrawals. Additionally, comparing different types of savings accounts can help you find one that suits your needs. 

It’s important to consider your own savings goals when looking for the right account. Whether you’re looking for a high-interest account or a tax-free savings option, Chip offers a range of savings account for you.

‍Interest rates reflect the cost of borrowing money. When you take out a loan you are charged interest on the amount borrowed.

AER stands for "Annual Equivalent Rate" and it is a way to express the interest rate on a savings account or other type of deposit account in a way that makes it easy to compare the effective rate of interest you will receive. 

AER takes into account the effect of compound interest and expresses the rate as if interest were paid and compounded once per year. So AER is a standardised way to compare the interest rates across different accounts, and make sure you understand the interest you earn.

Interest rates are also relevant to savings accounts but for this, they are usually referred to as the “yield” or “return” on your deposits. 

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Why Do Interest Rates Change?

There are several factors as to how interest rates are determined. This includes the monetary policy of the central bank (such as the Bank of England), the strength of the economy and the overall level of inflation.

1. Inflation: When inflation is high, it means the purchasing power of money is decreasing and requires more money to purchase goods and services. Raised interest rates make borrowing more expensive which can slow economic growth whilst reducing inflation.
2. Economy: If the economy is struggling and unemployment is high, central banks, such as the Bank of England, could lower interest rates to encourage borrowing and spending. This can help stimulate economic growth.
3. Monetary Policy: Central banks can use a variety of tools to control the money supply and interest rates in the economy. For example, buying or selling government bonds on the open market can influence interest rates and the supply of money. Governments can also have an influence on interest rates through policy decisions.

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What Types of Interest Rates Are There? 

There are several different types of interest rates which can apply to different types of financial products. The two common types of interest rates are:

1. Fixed Interest Rate: A fixed interest rate is when an interest rate remains the same over the life of a fixed term or other financial product. For example, a fixed-notice account means it’ll have the same interest rate for the entire fixed term period. 
2. Variable interest Rate: A variable interest rate is when an interest rate can change over time. This is typically based on an underlying index such as the prime rate, market conditions and is dictated by the bank's strategy and control.

There are different types of interest rates that can impact the overall cost of a loan. It’s important to understand the type of interest rate that applies to any given product before making a financial decision.

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How Do Interest Rates Affect My Savings?

Interest rates can affect and benefit your savings account by increasing the amount of money you earn on your deposits. Often, when you deposit money into a savings account, the bank pays you interest on that money. This is expressed as an annual percentage of the total deposit. 

When interest rates are high, it means you can earn a higher return on your savings. This can help your money grow faster. High-interest rates can also help you protect the value of your cash against inflation. This means that your savings lose less value over time. 

Interest rates can vary widely between different types of savings accounts and between banks. It’s always important to do your research into savings accounts and banks to ensure you’re getting  a competitive interest rate and that your money is protected by initiatives such as the FSCS (Financial Services Compensation Scheme).