Getting a savings account is something that many of us consider at some point in our lives. Whether you want to go on that holiday of a lifetime, or you’re saving up for a home or a wedding, there are many reasons to head to your bank and sign the dotted line on that savings account form. Not only does it give you extra security in case of a financial emergency, but it’s great to know that you can achieve those dreams. Here are 5 things that you should know about savings accounts.
#1: There are different interest rates
Of course, you will receive some interest from putting your cash into a savings account. This ranges from around 0.5% to an average of 5%, depending upon the conditions of the account and whether you want to have easy access to withdrawing your cash. Interest rates always change, so it’s important to keep on top of this and make sure that you’re always keeping your money in the best accounts.
#2: The terms of access are important
Generally, the terms of access of your savings account are what influences the interest rates. For example, if you’re OK with putting your money into the account for a fixed period of 12 months or 2 years, then you are likely to be getting those 5% interest rates. However, if you want to access it whenever (for example, in case there is an emergency) then this will leave you with rates of around 2.5% as a maximum.
#3: You may want to split your cash across accounts
If you have a lot of money to put into your savings account, you may want to consider investing it in different ISAs. This will allow you to get the most out of your money, and boost the interest rates that are available to you. Because of this, you can keep some in fixed term accounts and have some of your money in easy access savings (should you need it immediately). Sites like Investments Explained can help you to calculate returns.
#4: There could be limits on what you can put in
What you will find in certain high interest savings accounts is that there are some limits on what you can put into them each month. This is OK if you’re only planning on putting a few hundred pounds in per month, but if you have a lump sum of money, or you want to go above this, then you may need to look into your options here. On the other side of the coin, there can be minimum deposits each month.
#5: There are some conditions of opening an account
For some savings accounts, you need to have a certain amount of cash available to open them. For example, you may need to put £300 into the account when you first start it, or you could open it with as little as £1. This is something that you need to look into when considering the accounts that you’re going to open, as it needs to be in line with the amount of cash that you have ready to put into them now.
This is a collaborative post.