We all know it’s important to save in a sensible and efficient way, but one thing that you may not know (or even think about) is which saving product will help you achieve the best savings results? Which products and bank accounts will make the money we put aside go furthest?
To help you out, we’ve produced this handy savings accounts guide, to give you an idea of the different ways you can capitalise on your savings. Whether you’re saving for a specific end goal or you just want to put away money every month to guard against emergencies, there’s a savings account for you.
If you’re looking to start a long-term savings plan, you should certainly consider setting up an ISA. These accounts traditionally offer good interest rates, so you’ll really be able to see your money grow. Another bonus is that your interest won’t be taxed. You can pay up to £3,600 a year into an ISA.
Instant Access Savings Accounts
Otherwise known as ‘no-notice’ accounts, instant access savings accounts allow you to get hold of your money whenever you want, without obligation to give the bank any advanced notice. This might seem like a benefit, but it comes at a price; these accounts generally have relatively low returns rates.
If you’re in a solid financial position, you might feel confident enough to put your savings away untouched for a while, so that they can grow and maximise their interest potential. In that case, a notice account could be an excellent option for you. Normally you have to provide between 30 and 120 days’ notice to access your money, but the returns are often better than those offered by instant access accounts.
Regular Savings Account
A regular savings account is ideal if you want to save a little bit of money from your paycheque every month, rather than investing a significant lump sum. The deal is, you agree to pay a set amount of money into the account every month – depending on the bank you choose, it may be possible to vary this amount. A regular savings account will help ensure that you don’t undo all your hard work, as you can’t access your money until the end of the year.
Don’t forget, some banks offer accounts that, for a monthly charge, include extras like mobile phone insurance, memberships and discounts. Just read the small print and make sure that you really will get best value from the account. And only opt for one of these if the benefits will save you money overall, and if the perks are products that you would otherwise buy.
Remember also the purpose of your savings. Are they there to be used in emergencies to cover unexpected costs? Are they to save up cash for a big expenditure? Or are they simply to put money aside for a rainy day? Consider this when you’re choosing your savings account product – you may need to be able to access funds at short notice, or you may benefit from the lack of temptation when your savings are less accessible. Be realistic, and remember our top savings tips to ensure you’re really saving as much as is feasible and affordable for you.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk