5 Savings Myths that could be holding your Money Back

The best saving money tips are not always about saving more money. They are about using the money you already have in the best possible way.

Why savings myths matter

Saving money may seem simple, but there are many decisions and choices available and it’s not always best just to pick the account that pays the most interest or the account that gives you the fastest access.

Here are five common savings myths, plus practical money tips that may suit your situation.

Myth 1: The highest savings rate is always the best choice

A good interest rate is important, but that is only one factor in choosing the right account.

Before you move your savings, think about what you need the account to do for you. If you may need cash for surprise bills, easy access savings may matter more than a fixed rate. If you will not need the money for a set time, more rules may be fine.

One simple step is to compare savings accounts as a whole, this includes.

• Access and withdrawal limits
• Minimum balances and funding rules
• How and when interest is paid
• Fixed terms or notice periods

Myth 2: Should I save while paying off debt?

The cost of borrowing is a major factor, in most cases debt often costs more in interest than savings earn, which means high-cost debt may come first.

A basic emergency fund will still help with unexpected costs. MoneyHelper suggests that a small emergency fund is a good money saving tip when your financial situation allows. However, if you’re having trouble with payments or usual household bills then you should look for independent debt help first.

Myth 3: Joint savings account tax and your allowances

A joint account does not always mean one shared tax-free allowance. HMRC usually splits the interest on a joint account equally between both account holders.

For the 2026/27 tax year, the personal savings allowance is up to £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. Additional rate taxpayers do not receive an allowance.

Myth 4: How much emergency fund do you need?

An emergency fund is money to keep in an easy access account to cover all potential unforeseen bills and expenses. MoneyHelper suggests three months of usual spending and household bills as a guide.

Myth 5: Once I've opened a savings account, I can forget about it

A savings account may suit your needs when you first open it, but rates, terms and conditions and your needs may change.

It’s best to review your savings from time to time, including:

• Interest Rates
• Withdrawal limits
• Deposit limits
• Terms and Conditions
• Your financial needs

Make your savings work around you. Start with what the money is for, when you may need it and how much access to your funds matters.

Frequently asked questions

How often should I review my savings account?

There is no fixed rule, but it’s wise to check your savings;

• Regularly
• When your situation changes
• When an account matures
• When you’re told the rate or rules are changing

Do I have to pay tax on my savings interest?

It depends on your income, tax band, the account and current tax rules. The personal savings allowance may let some people earn savings interest without tax. Check current HMRC guidance for your own case.

Should I save while paying off debt?

The cost of your borrowing is a major factor when deciding how to prioritise debt and savings. Priority of costly debts may need to come first, as the interest on the repayments may be more than what you’d earn on any savings. If repayments are hard, free independent debt help can show you what to deal with first.

Is the highest interest rate always the best savings account?

Not always. Make sure you compare the headline rate with the access to your funds, withdrawal limits, minimum balances, fixed terms, how interest is paid and terms and conditions that may affect how you use your savings.

Next steps

If you’re currently reviewing your savings, these pages may help you compare savings accounts, identify your best options and offer some money saving tips:

Compare savings accounts

Current interest rates

Cash ISAs

Explore Easy Access Savings

Product availability, rates, and terms can change. Please read the product summary and the terms and conditions before you apply.

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