If you have some money that you want to keep in a savings account, then you may be considering which savings account to use. There are a lot of different ones to pick between and it is good to have a think about what you want from an account so that you can choose the one that is best for you. You will find that there are advantages and disadvantages to different types of savings account and it is worth being aware of these so that you can make the right decision for you.
Amount of Interest
You will find that the amount of interest that you can get from different types of accounts will vary a lot and you will need to decide what will suit your needs. It is always tempting to go for the higher interest options, but there will normally be conditions associated with this which means that you could find that they will not always suit you. For example, most of us would like to have some money available instantly for emergencies. There are many instant access savings account but these tend to pay very low interest amounts because they will not be able to invest your money as they will not know when you will need it. However, there are accounts where you have to leave your money in for longer and you will get paid more interest. You will need to decide whether you are happy to do this in return for getting more money back. There are different types of account and the main ones will either make you give notice to withdraw or tie your money up for a certain period of time.
Notice for Withdrawals
If you use a notice account it will mean that you will have to ask for a withdrawal a certain amount of days in advance of you needing the money. This means that you will need to be organise and think well in advance. You may need to give 30,60 or even 90 days notice depending on the bank or building society that you are with. The actual amount of days will vary a lot. You may find that with some accounts you will be able to make an instant withdrawal but you will forfeit some interest or it might be limited to a certain amount of withdrawals or a certain value. It is therefore very important to check out the specific terms and conditions of the account so that you know what you are getting yourself in for before you start.
Tying Money Up
There are some savings accounts where you will need to keep the money in for a certain time period. This will tend to be a number of years, perhaps one but often three or five, but it will vary. You may not be able to take your money out at all during this time or you may find that you will be able to make a withdrawal but lose interest. As with the above, it will depend on the bank or building society and their specific terms and conditions.
It is important to understand exactly how a particular account works when you are considering it. Then think about whether you will be happy to tie your money up. It will be likely to give you more interest, but you might want to think about whether you feel that you might need the money in the meantime and how you will cope without it. It might be sensible to keep some in an instant access account in case you need it quickly and then tie the rest up.