Online Savings Account

You may think one savings account is very much like another – perhaps differing only in the interest rate paid, but in fact there are many forms of savings account available. Of these, some of the best rates can be found by opening an online savings account. So what’s the difference between an online savings account and a traditional savings account? In terms of the basic product, access conditions, withdrawal limits and so on, there may in fact be very little difference. The major difference is that you can access your online savings account from wherever you wish and at a time of the day to suit you. This means that the days of standing around in lengthy queues in the branch waiting to be served could be gone forever!

However, the convenience factor is not the only reason to consider an online savings account as opposed to a traditional one, and you will often find that the saving opportunities that you are offered will also vary considerably. The reason why an online savings account can be better value is simple, online banks don’t have vast premises costs and no human staff intervention is required. That means that a bank's overheads for administrating and running an online savings account are far lower than for a conventional savings account. Now you may not be too motivated by the thought of saving your bank money but in practice many banks will pass these savings back to their customers in the form of more competitive interest rates on their online savings products. If you’re a saver, that’s good news for you and an incentive to switch to an online savings account.

Choosing an Online Savings Account

• Find out what kind of access you will have to your money.  For the more competitive products, you will often have to commit your money to the online savings account for a set period of time, and access over this period make be strictly limited.  If you are happy to not touch your money for several years, you will get much better deals.
• Make sure that existing UK government banking guarantee schemes will cover your money when you deposit with the bank 
• Is telephone banking offered as well as online?  Find out which facilities are available to you as an online customer.  Having a customer services representative available at the end of the phone if you have any queries is a great selling point.
• How much will your money grow?  This is, of course, the million dollar question when you are selecting an online savings account.  Compare products using the AER. It stands for ?Annual Equivalent Rate? and it is the recommended way to compare savings products and current accounts. AER is how they calculate the interest paid to you. It shows how much interest you are earning on your cash if it was paid once a year and built up annually.
• Get in touch with the bank and ask them questions. You can find out more about the products that interest you, and gauge the level of customer service at the same time!