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Instant savings accounts in the UK

Instant access savings accounts (ISAs) are highly popular with UK customers because their interest rates protect funds from reducing in value or acquiring tax obligations. Bank customers can save more than £10,000 and benefit from up to 3.3 percent interest, which is credited into the account each year. The reason for their popularity comes down to the fact that they allow people to take out money at any time. ISAs also offer people the opportunity to raise their annual allowance and provide excellent flexibility for those who wish to transfer their money into a new account.

The AA offers an interest rate of 3.35 percent, which is the highest in the market. However, since this is a variable rate, there is no guarantee that customers will exceed the base rate of 0.5 percent, which is set out by the Bank of England. Despite this, with interest rates remaining frozen in recent years, many people have profited more from variable rates rather than fixed rates. However, for people looking for a guaranteed return, Santander assures customers that they will always earn at least 2.81 percent interest on their savings for 12 months, which is 2.31 percent above the base rate.

The main limitation a Santander ISA is that since it does not permit fund transfers from other existing ISAs, it does not offer the flexibility of other accounts. On a final note, it is important to understand that the rates for instant savings accounts are expected to change next year. The most profitable option for customers is to choose a 12 month plan before switching to a new account that offers a higher rate of interest.

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