Maintaining a savings account is probably one of the best financial decisions that you will ever make. You can dip into your savings account during financial emergencies, and rather than just letting your savings sit stagnantly somewhere, you get to have a safe storage for your hard-earned money. Also, you get the added bonus of earning interest by merely opening and maintaining a savings account. You can open a savings account at a commercial bank or at any financial institution offering such services in your area.
What are the different types of savings account?
In the United Kingdom, there are a lot of different types of savings accounts that depositors can choose from. You just need to know which type of savings account will suit your financial needs the best. Here is a quick run-through of the different types of savings accounts:
Instant Access Savings Account
With an instant access savings account, the bank will issue you a cash machine or ATM card upon opening a savings account. This proves to be more convenient for people who are always on the go, you needn't physically go to the bank to withdraw money. An instant access savings account will allow you more convenience when it comes to the number of commercial establishments that you can withdraw money from, since you just need to look for the nearest ATM machine location. Other features of an instant access savings account include the ability to transfer funds from one account to another, as well as the easy accessibility of internet banking.
Basic or Regular Savings Account
This is the most basic and the most common type of savings account in which open a savings account by depositing money. The money that you will deposit will earn a certain percentage of interest over a period of time. Just like with any financial institutions, there may be general service charges for opening and maintaining a regular savings account, but these fees are worth it in the end since you have a secure way of storing your money while earning interest at the same time. Be sure to check out the minimum balance clause before opening a savings account. In some banks, you will be charged penalties if you fail to meet this minimum balance. Other financial institutions, however, have lower or even zero maintaining balance conditions which may be better for you, especially if you have an unstable or non-fixed monthly income, and you are not sure how regularly you can make a deposit into your savings account.
High Interest Rate Savings Account
This is a basic savings account where you get to earn a specific percentage of interest merely by deciding to keep your money with the bank. However, you will get to enjoy a higher interest rate the longer that you keep your money tied up in the savings account that you will maintain. Different institutions have different rates on this type of account, so be sure to shop around to find the bank that'll offer you the best interest rate.
Committed Savings Accounts or Notice Accounts
With a committed savings account or a notice account, there is a certain period where you are not allowed to withdraw money from your savings account. This lock-in period during which you are not supposed to withdraw money will serve as insurance in exchange of a higher interest rate. If you do end up withdrawing money from the savings account within the lock-in period, then the bank will charge you with a penalty. For example, if you decide to keep your money in a notice account for a period of 90 days, then you cannot make any withdrawals within the next three months. In return, your money will earn a higher interest rate as compared to a basic savings account.
This type of savings account is ideal if you wish to store your money for a longer period of time, and you do not foresee any expenses that may crop up in the immediate future. Not only will you get to enjoy a higher interest rate, but you will also get to keep your money secure for a longer period of time.These are just a few of the existing types of savings accounts that you can open with a local commercial bank in your area. By knowing the basics about the different types of savings accounts, you will be able to decide which one will give you a better interest rate so that you can keep your money safe and secure while you are earning something in return.