There are many different savings accounts available and it can be difficult to know which one to choose. It is therefore worth thinking about what is important to you in a savings account and then you can decide between them more easily.
The interest on your account is something that is pretty important to most people. They would like to get the highest interest possible. Unfortunately, most savings accounts have a very low rate of interest compared with the amount of interest that you pay on a loan, for example or compared even to inflation. Therefore, it is worth looking around to see what rates there are and how they compare. There will be some differences between them and these differences will also change, which means that you may need to swap the place you save from time to time so that you can move to one with better rates.
Amount you can pay in
Some accounts will have a limit on how much you can pay in. This tends to be things like bonds, ISA’s and other specific savings accounts. It is a good idea to find out whether there are any limits as you may have a significant amount to pay in, perhaps a certain amount a month or a lump sum and you want to make sure you will be able to pay it in. Some accounts will pay different levels of interest depending on how much money you have paid into them so watch out for this as well.
It is important to think about whether you want to be able to have instant access to your money. If you want to be able to draw it out with no notice, then you will need to make sure that you pick an account that allows this. You will find that there are some accounts where you need to give notice to get the money. This could be weeks or months and you might feel that this is okay but you need to think about what you would do if you did need the money right away. There are also some accounts where you cannot withdraw the money until a certain date. This tends to be the case with bonds where you will have the money in them for a year or several years and then you will be able to have it back when they mature. You might want to have some money that you can get to right away and some that you can leave in for longer. The advantage with using accounts which are not instant access is that they tend to pay a higher rate of interest.
Some people like to save with a bank or building society that has a local branch. They like to be able to go to their local high street and pay in or take out money there. This is something that is getting harder to find though as more people are happy with online banking and high street branches close down. It is likely that if you want this, you will need to go for an account that pays less interest so you will need to decide whether you think that it is worth it.
It is good to also think about the reputation of the company that you are saving with. We often like to go with a bank or building society that we have heard of. Although this is not necessary it can give us peace of mind. However, we may find that we can get a better rate form one that we have not heard of. Therefore, it can be worth investigating others. As long as they are covered by the FCA rules that means that you will get your money back should anything happen to them, then you are safe in using them.