Savings Accounts

Don't keep your money under your mattress, put it in a savings account and make it work for you. Although interest rates on savings accounts are lower than they have been in recent years, you can still make a sizeable return on your hard-earned cash if you find the right bank account. Also, by putting away even a small amount each month from your wages, you are reducing your need to borrow money in the future. Calculate how much of your disposable income (after rent and bills have been paid) goes on necessities, and be realistic about the amount that you can afford to save without getting into financial difficulties.

The best deals on savings accounts can be found when you agree to lock your money away for a certain length of time, and as you would expect, if you deposit a larger amount, your interest rate will be more favourable. Some savings accounts will allow you to withdraw money but will limit you to a set number of cash withdrawals each year. Make sure that you are aware of all of the conditions, because it is likely that your interest rate will be affected if you take out too much. You are not limited to one savings account, so you could have one for a 'rainy day' that allows you easy access, and another linked to stocks and shares that you use as an investment opportunity. Consider ISAs (Individual Savings Accounts) for tax-free savings up to a maximum limit, and if you are considering any savings opportunity that constitutes a risk to your original investment, seek professional advice from your bank or an independent adviser first.

Tips for getting the most from your Savings Account

• Pay off your existing debts first.  There is no point getting a good deal on your savings account interest rate if you are being charged each month for a credit card or overdraft.  Get your debts cleared, and then you know that any interest you earn is yours to keep.
• If you are paying a set amount into a savings account from your wages each month, make sure that you set the payment to leave your current account as soon as you have been paid. This way you will find it easier to manage your finances for the rest of the month, as you will know exactly how much you have left to spend.
• Find out how long you need to 'lock away' your money for, and if there is a minimum monthly deposit to qualify for the best rates.  If the conditions are too restrictive, this counteracts the benefits of a good interest rate on your savings.