Choosing a savings account can be a daunting task. There are so many various types to choose from, all offering something slightly different. But how can you choose the best savings account? Where do you even begin? This article will cover everything you need to know.
What Is A Savings Account?
A savings account is a place you can deposit your money, then leave to earn interest. With a current account, you have everyday access, unlike savings which aren’t as often accessed.
Some accounts restrict access to your funds, offering fixed interest rates over an agreed period of time. These accounts will usually have better interest rates, on the other hand, easy access accounts will have lower interest rates but have flexible access.
What Should I Look For When Choosing A Savings Account?
It is always recommended that when shopping around for savings account to find one that suits your savings goals and current financial situation. Remember, you may want to have access to the account, so this should be considered too.
Also, there are online and traditional accounts too. If you’d like to manage your account electronically, via a smartphone or computer, you’d open an online account. If you prefer using a branch, you would select a traditional account.
It should be noted that they do not have to be long term. Often, interest rates fluctuate year after year, so it is wise to shop around and have a keen eye on what other brands are offering. You could receive a better rate elsewhere.
For fixed-rate savings accounts, you should set a reminder for the date that the introductory interest rate ends. For offers that have no end dates, have a one-year reminder in place so that you can evaluate where your current finances are at.
Furthermore, you should be careful that if you take money out before the fixed deal ends, there may be fees involved. Try to avoid this as it can be an easy mistake to make.
When it comes to savings, you can have numerous accounts at the same time. This is great for people who can afford to store money away in smaller increments. For these customers, it is recommended to use different accounts that have multiple benefits and features to spread the bonuses.
Things To Remember | |
Introductory offers and rates usually end after the first year | After the first year, check to ensure you’re still receiving a competitive rate compared to other banks. Some will even offer bonuses if you re-invest. |
Some restrict the amount of withdrawals | If you’re looking to withdraw some cash, some banks will have different rules, such as set periods or fees. Check these restrictions before applying. |
Some require a minimum deposit | Companies vary when it comes to minimum deposit amounts. They can be as little as £1 all the way to £1000 or more. Shop around and see what works best for you. |
Interest rates are paid differently | Some companies will pay interest on a monthly basis, others annually or quarterly. If you need the interest for your day to day living, this could be important, so always check first. |
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