With so many savings accounts on the market, it can be difficult to find one that's right for you. Read on to find out what to look for and make sure you get an account that suits your needs.
One of the safest ways to grow your money is to store it in a deposit account with a bank or a building society where it is left to gather interest over time. These deposit accounts, more commonly known as savings accounts, are suitable for short to medium-term savings, offer better interest than current accounts and are available at most banks and building societies and through government National Savings and Investment (NS&I) schemes. In fact, there are numerous methods in which you can save like this, including at the Post Office, and it certainly advisable to shop around.
Many savings accounts (such as Fixed Rate accounts) won't allow direct access anytime – so ATM withdrawals might not be allowed. This means that the money is 'locked away' for a certain period of time. A fixed rate means that your money won't be exposed to changes in the base interest rate, however, which can be a great bonus as well as a disadvantage, depending on the current climate.
In considering a savings account with most providers, you may very well be asked to consider a cash ISA (individual savings account) which provides a 'tax wrapper' for your money (the money is not subject to tax). The rules for this are slightly different.
There are also some very attractive online savings accounts these days, that have practical, easy to manage features. You can open the account online and earn bonus interest on the months when no withdrawals are made. These accounts are often geared for longer term savers, so if you think you will need regular access to your money it might be worth looking into other options. This will be the first thing you’ll have to consider when looking at savings accounts – what length of time you will be investing for, and what kind of access you feel you would like for your money. You can also set up regular savings plans that deposit a certain amount each month.
You’ll therefore need to consider the following:
PROVIDER – is it an organisation you are happy to work with?
ACCOUNT TYPE – Is it an e-savings account, a term deposit account, or an on or offshore account?
INTEREST GROSS – gross refers to the the rate that determines the daily interest calculation.
INTEREST AER - Annual equivalent rate; also takes into account when that interest is added to the capital. The best figure to compare is AER.
INTEREST PAID – when is the interest paid? Monthly, quarterly, yearly or on maturity.
ACCESS – How and when (if at all) you have access to your funds.
MINIMUM INCOME – the minimum amount the provider will ask you to have in the account at all times.
CONDITIONS – is it an online only account? It also might be a child bond, or you may need to be over 16 or 18, and there may also be a minimum amount with which to open the account.
WITHDRAWAL ACCESS – whether or not you can withdraw with an ATM, or at a branch, or online only, which is increasingly more common.
A financial adviser will be able to advise you on the different types of savings accounts and which ones are right for you. If you wish to speak to an LGBT-friendly financial adviser about this or any other matter, please enter your postcode under the map on the right to find an adviser near you.
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