If you’re looking to build up a savings
culture, don’t just plump for the first savings account you find, as
accounts vary widely in terms of their offerings, according to
moneysupermarket.com.
When choosing which savings account to
go for, you need to think carefully about whether you will need access
to your money; how long you are looking to save for, and how you want to
operate it. For example, do you do all your banking online, or do you
like being able to pop into a bank branch and talk to someone
face-to-face?
Easy access accounts
If you want to build up a rainy day fund, which you can access whenever you need to, you will need an easy access account.
However, don’t assume that just because
an account is marketed as easy access, you will be able to make
withdrawals whenever you want to. Often, you may only be able to male a
number of withdrawals a year, so always read the small print carefully
before applying.
Notice accounts
If having immediate access to your
savings is not top on your priority list, you may want to consider a
notice savings account instead.
This type of account requires savers to
let the provider know in advance that they want to make a withdrawal.
Typically notice periods start from 30 days, but can be as long as 120
days or more.
The biggest benefit of this type of
account is therefore the fact that it removes the temptation to withdraw
money on the spur of the moment.
Beware of the bonus trap
If you are opening a savings account,
you are going to want to earn the most competitive savings rate
possible, but watch out for short-term bonuses which disappear after the
first year.
How much are you planning to save?
Savings accounts usually come with a minimum a investment limit.
As a general rule, the steeper the
initial deposit you have to make, the higher the returns are likely to
be; so if you are fortunate enough to have a big lump sum to put away,
you should focus on accounts with higher minimum investment limits.
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