UK Savings Week: Seven tips for picking the perfect savings account for you
As UK Savings Week continues, the focus is firmly on how much savers can increase their pot and the features to look for when deciding where to store your money.
This week is UK Savings Week and it’s been pretty auspicious. Savers have seen rates on easy access, notice and ISA equivalents accounts reach their highest levels since 2008, according to financial data firm Moneyfacts.The average easy access rate has risen to 2.95% and the average notice rate to 4.04%, hitting more than 4% for the first time since March 2008, its previous highest point since Moneyfacts’ records began. Easy access ISA rates rose month-on-month to 3.04% too, while the average notice ISA rate rose to 3.89%, proving to be the highest rate since November 2008 (4.91%).
Meanwhile both Yorkshire Building Society and Nationwide have both launched table-topping savings accounts this week.
And yet, at the same time, a new survey from the Building Societies Association (BSA) also found that more than a third (34%) of consumers hold most of their savings in a current account, which offers little or no interest.
An overwhelming choice
One pressing issue that is deterring potential savers is the abundance of choice in the savings market, with customers bombarded with a huge array of savings products.
Katie Brain, consumer banking expert at Defaqto, commented: “The amount of options available to people who are looking to save, especially if you’re just starting out on your savings journey, can be overwhelming.
“Many accounts will have ‘headline’ interest rates but you must also look into the small print as nearly all accounts will have exemptions and limitations that you need to be aware of.”
With that in mind, Defaqto has put together some top tips to consider when thinking about which savings account is best for you.
What to consider when picking savings account
- If you’re saving for a rainy day and would need immediate access to your money, then you need an instant access account. Rates on these are the best they have been in a long time
- Consider how much access you may need. Several accounts have a maximum number of withdrawals allowed per year, and if exceeded the interest rate drops or an interest penalty is applied.
- Is there a bonus period? You may get the headline interest rate for a limited time only. If so, make a note of when this comes to an end and then review what is available when it’s coming to an end. You may be better off switching once any bonus period ends
- Check how you open the account? Are you happy to open the account online?
- Check how the account is operated? Are you happy to operate the account online only as some won’t have in-branch facilities
- Do you want the interest paid monthly instead of annually? Not all accounts offer the option of monthly interest
- Be mindful of the Personal Savings Allowance and whether to use a Cash ISA or not