In simple terms, a savings account is an account you put money in and you earn interest.  The interest is paid tax-free, but if you are a basic rate taxpayer, the maximum interest you can earn tax free is £1000 per tax year, and if you are a higher rate taxpayer, it is £500 per tax year.  This is known as your Personal Savings Allowance (PSA).  If your interest exceeds these allowances, you would have to  pay tax on the interest.  See the Individual Savings Accounts (ISAs) section to understand the tax free options.

The main types of savings accounts are:

• Easy-access savings.
• Notice accounts.
• Regular savers.
• Fixed-term accounts.

The links at the end of the page explain each of these.

Compound interest.  Before  looking at the accounts in detail, an important thing to consider with savings is compound interest.  This is essentially interest on the the money you are contributing to your savings account, and the interest you have earned.  For example, if you put £1000 into an account that earned 4% interest every year:

• After one year, you would have £1000 + 4% of £1000 = £1,040.
• After 2 years, you would have £1040 + 4% of £1040 = £1081.60.
• Continue the pattern, after 5 years, you would have £1,216.65 and after 10 years, £1,480.22.

If you also contribute £1000 per year to the account, this becomes even more beneficial:

• After one year, you would have £1000 + 4% of £1000 = £1,040.
  
• At the end of year one you add £1000 (so you have £2,040).
• After 2 years, you would have £2040 + 4% of £2040 = £2,121.60.
• If you continue this pattern, you now have £5,632.98 after 5 years, and £12,486.35 after ten years. 

Have a look at the compound interest calculator on the Monevator site if you want to insert your own numbers (or search for "compound interest calculator UK" online.