It is important to try to save a little money each month to ease your passage through life. Saving instils good habits and avoids the pitfalls of becoming overly reliant on credit. Listed below are five of the best ways you can find the best high interest savings account to suit your needs.
- Easy access savings account
- Cash ISA
- Stocks and shares ISA
- Savings bonds
- Regular saver account
If you want to start saving but think you may need to access the account quickly in future, then an easy savings account is the best choice. There are a number of accounts available; some offer unlimited deposits and withdrawals, others only offer a stated number of withdrawals in any calendar year. It is wise to consider your specific needs for the account before opting for this form of saving.
A cash ISA is similar to an easy access savings account, but savers can save up to £5,340 a year tax-free when depositing money into an ISA. Some ISAs allow you to transfer funds in from another ISA, while others do not and if you are planning to do this, it is important to check this in advance. In addition to the rate of interest, it is worth understanding how you can access your ISA (online, via telephone or in branch for example) and whether there are any penalties for making withdrawals. A fixed-rate cash ISA, for example, tends not to allow any withdrawals during the first 12 months of operation.
As of 2011-12, you can invest up to £10,680 in a stocks and shares ISA, in which your cash is invested in a number of assets of your choosing, with any returns they generate, given to you tax free. The risk is, of course, that your return may not be as much as you would have received in other savings deals, but the flip side is that occasionally you can receive considerably more from this type of investment.
If you have significant capital to invest immediately, a savings bond may be the best option. As a rule of thumb, the more you deposit in a bond account, the better the deal you tend to get. You can opt for a fixed rate bond, which pays you a fixed rate of interest over a set period of time, or a tracker bond, which tracks at a set rate above the current base rate.
A regular saver account offers a good rate of interest in return for a regular monthly investment, usually between £25 and £250. This is an excellent choice of account for someone seeking to save money regularly each month and who does not require immediate access to the funds within the first 12 months of operation.
Most banks tend to offer access to these accounts over the phone or in branch only, and it is worth checking this with your provider beforehand. It is also worth noting that some providers allow the investor to miss two calendar payments without penalty. If you are saving for a definitive item, want to set aside a set sum each month for that and prefer to deal with your account in a branch or over the phone, then this is the ideal account to choose.