Interest Rate Savings Account

If you’re trying to grow your savings, you do in fact have a large number of options open to you including any one of several forms of interest-rate savings account. The description ‘interest-rate savings account’ refers to a savings account that will give you a specified rate of return. This rate of return may be fixed or in some cases it could be variable and linked to various external factors such as background national interest rates. Typically, if you have an interest-rate savings account that offers you free and unrestricted access to your funds, the interest rate payable will not be massively attractive. One key form of savings account is the ISA. The ISA or Individual Savings Account is a form of savings that can offer fixed or variable rate returns but one of its biggest advantages is that, up to specified limit per person, it is guaranteed to be free of capital gains and income tax.

It is also possible to place your money into a notice period savings account. These will offer sometimes significantly higher rates of interest because you can’t withdraw your money for a specified period. In general, the longer the notice period required, the higher the interest rate you’ll receive. It may be worth checking such savings accounts carefully before you commit to them because if you do need to get your money out in a hurry you may find that you face penalty charges. If you do want a higher yield interest-rate savings account, you could look for one that is split between a guaranteed interest component and one that is investment related and therefore variable. These types of savings products can be quite specialised and by definition the variable component may not generate the return you anticipate. In some cases an interest rate savings account may involve a component of risk to your capital and as such they are difficult to consider as ‘savings’.

Interest rate Savings Account Considerations

• The amount you have to invest;
• The frequency of your deposits (one-off lump sum or monthly deposits etc);
• The period of time you are willing to lock-down your money for - in other words if you take a product that requires 'x' months' notice before you can access your money then the interest rates will typically be higher than if you demand instant access;
• If you select a variable rate savings product, the amount of growth will vary depending upon the external factors it is linked to;
• ... and of course, the provider and their product! It goes without saying that you need to engage with the benefits offered by the account, and this should be a primary concern when choosing an interest rate savings account.