SAVINGS ACCOUNTS

What is a Savings Account?

Standard savings accounts are a really good method of saving for the future or preparing for any unexpected emergencies, but you want to make sure that you are getting the most out of your savings. In some circumstances the money you save builds up interest and the interest rates will be the main focus when considering a savings account. Savings accounts are designed to hold the money that you do not need immediate access to; these accounts will have higher interest rates.

You should make sure that you understand the restrictions of the account. In terms of disadvantages you may be charged for withdrawing money but in most cases you can withdraw money from a standard savings account at any time.

Information Regarding Easy Access Savings Accounts

There are also easy access savings accounts, also referred to as instant access accounts are ideal for those who want to put money aside but want to have direct access to their savings. As the name suggests these accounts permit you to access your money without notice or penalty. However, this instant access to your funds does reduce the interest in comparison to other savings accounts.

Some banks will offer good interest rates for these accounts to gain new customers, but will lower the rate shortly after so it could work in your favour if you are willing to move your money around in return for the best interest rates available. Consider whether the interest rate is fixed or variable before you open the account.

What is an Internet E-Savings Account?

If you are happy to manage your account online then you should consider an internet savings account which allows you to manage your savings online. The advantage of these accounts is that they are flexible and convenient; you can manage your account and make transfers whenever you like and you are always in control of your savings. In some cases they offer more competitive interest rates because of the lower administration costs involved but interest rates are variable so it will be worth your while to compare different accounts. There are often different advantages on internet accounts such as instant access or fixed rates so you should compare different services to find the best account for you. Please note that in order to withdraw cash you will have to transfer money into your current account but some may provide a cash card.

What are Fixed Rate Savings Accounts?

With a fixed rate savings account the interest rate is fixed for a set period and you cannot obtain your money during the set time; often the longer the set time the higher the interest rate. These accounts are a method of saving for the future because you will know exactly how much interest the money will earn. You also don’t need to concern yourself about the interest rate being reduced which is particularly comforting considering today’s economic climate. In some instances you may be able to make a withdrawal but if you do you risk losing some of the interest. Fixed rate accounts are designed for those who will not need access to their money for a few years.

However, although your interest rate will not drop you could miss out on any increase in interest rates. This means that there is a certain level of risk involved so it pays to search around to find the account with the best interest rate. Many fixed rate accounts will require a minimum deposit which can be high.

What are Term Deposit Savings Accounts?

Term Deposit Savings Accounts are designed for those who want to know exactly how much interest they are going to earn and for those who do not need access to the money during the term of the account. The interest rate is guaranteed and will not change throughout the term of the investment. Most term deposit accounts allow you to consider whether you want the interest paid monthly or annually and also how you want to have your interest paid. These accounts are flexible because you can chose the time period which is best for you which can be anything from one month to five years and you are also offered a variety of reinvestment options. In most circumstances withdrawals or additional deposits will not be permitted but you can hold more than one term deposit at anytime. Try to avoid accessing your money as you could lose the high interest rate. Usually, the longer the term set the higher the interest rate, so for short term investments these types of savings accounts may not be the best option.