How to find the Best Savings Account

If you want to save money then it can be a good idea to make sure that you put the money in a good savings account. There are not massive differences between the banks and building societies that offer the accounts with regards to how they operate, although you might have preferences with regards to whether you have used them before, if they are well-known, if they come recommended etc, but the main thing most people will be interested in is the interest rate that they can get. There are different types of savings accounts which will have different interest rates and it is a good idea to have an understanding of some of them.

Instant Access

Instant access account will allow you to get the money that you need straight away. This means that as soon as you need to draw money out of the savings account you will be able to do a transfer or withdrawal and get it right away. This is very handy, if you are just putting some money in an account to fall back on in emergencies or in case you need some money quickly. However, the interest on these account will be very low and so you probably will not want to keep very much money in it.

It’s important to always compare options when finding the best saving account.

Fixed Rate

There are fixed rate accounts which tend to offer higher interest rates. These are often bonds and you will have to keep the money in the account for a certain period of time. This will usually be at least a year but could be two, three or even five. For some accounts you will be able to withdraw your money early but you will not get the interest or there may be a bonus you get for not making withdrawals. However, for some accounts you may not be able to withdraw the money at all. It is important to check and see how it works as you may want some flexibility in case you need the money in an emergency.

Notice Accounts

A notice account will only let you withdraw money with notice. This means that you may have to wait for a month or maybe up to three months before you can make a withdrawal. So will let the bank or building society know you want to make a withdrawal and they will wait until the relevant time period has passed before the money comes to you. Sometimes, you can make an immediate withdrawal but lose a chunk interest but sometimes there will not be this option. These will tend to pay more interest and so it is also worth considering whether this option might work for you.

Income Accounts

Some savings accounts will pay an income. This means that you will get interest paid on the account but it will not accumulate there but be paid into a nominated account. These can be good for giving people a passive income so great for anyone that is retired, for example. Of course you will not get the interest compounded (interest on the interest) but you can always put the income you are paid back in to the account or pay in a regular amount of money each month if you want to.

ISA

An ISA is a tax free account. These can be useful for some people particularly those that get a lot of interest of are higher or top rate tax payers. This is because a low rate or non-tax payer can get up to £1,000 a year in interest tax free. A high rate tax paying has a £500 allowance and a top rate tax payer has no allowance. This means that many people will not need to worry about paying tax on their savings interest. However, some people will be liable to pay tax and so they may be interested in using an ISA so that they can reduce the tax they pay. There is a limit to how much money you can put in an ISA and this can change from year to year and there are ISA accounts for different purposes so it is worth investigating these.

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