Money matters

Plan to keep savings in the piggy bank in 2021 year.

Saving for a rainy day? Or for something specific? You have options... - Credit: Getty Images/iStockphoto

Finance expert Derin Clark takes a look at the best savings options for depositing a small lump sum 

Whether you’re saving to build an emergency fund or for a specific goal, if you’ve received a small lump sum of money of a few thousands of pounds, putting the money into a savings account can be a good way of starting - or boosting - your savings. To help you make the most of your money, we’ve highlighted some of the best savings options to deposit a small lump sum of money. 

If you want to use your lump sum towards savings for an emergency fund, an easy access account may be the best option. These accounts allow you to make further deposits, so you can keep saving, while also allowing quick access to your funds. Some of these accounts do have withdrawal restrictions, however, so make sure you are aware of any restrictions before opening the account. A main drawback with easy access savings account is that they often pay the lowest saving rates. 

For those saving towards a specific goal, a notice account may be a better option. Like easy access savings accounts, many notice accounts allow you to make further deposits. Most will also allow withdrawals, but you must give a notice period before you can access your funds. In return for this notice period, these accounts often offer slightly higher rates than easy access savings accounts. 

If you are saving towards a deposit for your first home, you may also want to consider a Lifetime ISA (LISA). With a LISA you can save up to £4,000 a year into the account and you will receive a 25% Government bonus on any new money saved each year as well. This means that with the bonus you can boost your savings by up to £1,000 each year. A drawback with LISAs, however, is that the money saved can only be used for a few specific reasons, including using the money towards the purchase of your first home. If the money is withdrawn for any other reason you will incur a penalty charge which could result in less money in the LISA than you initially deposited. A LISA can only be opened by those aged 18 to 39 and you must have the account for at least 12 months before using the proceeds to buy your first home. 

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Choose where you place your lump sum carefully, for the best return and access - Credit: Getty Images/iStockphoto

If you’ve already got an easily accessible emergency fund and are, instead, looking for a more competitive interest rate for your savings you may want to consider a fixed rate bond. Fixed rate bonds are savings accounts that require a lump sum deposit to be left in the account, untouched, until the term of the bond has ended. Normally, you will not be able to make further additions or withdrawals from these accounts. In return, a fixed rate bond will often offer higher interest rates than easy access and notice accounts. The most common terms for fixed rate bonds are between one and five years. If you are considering a fixed rate bond keep in mind that savings interest rates are low at the moment, and there is a possibility that inflation will rise in the coming months, which may result in the value of your savings being eroded in real terms. 

Derin Clark is an Online Reporter at, the money comparison experts, specialising in personal finance