Savings Account Interest Rates

There are many banks and other financial institutions operating in the marketplace and there is, therefore, a very wide range of savings account interest rates to choose between. Knowing where these accounts are, what banks are offering them and the pros and cons of the respective accounts, may significantly improve the return you get on your savings. Unfortunately it’s not quite as simple as ranking the interest rates by value and seeing which one comes out on top because each of the accounts will have its own terms and conditions that may limit the amount of money you can save and the amount of interest that you can earn.

Some may have variable interest rates that are not guaranteed and you may not feel inclined to speculate. Other types of account may effectively lock up your money for extended periods meaning that you will not be able to access your funds in an emergency. Some accounts will allow some access to your locked funds if you needed, but only if you pay a hefty penalty. There are also offshore savings accounts where you may be able to get a high interest rate but perhaps the security and tax issues may be complicated. If you have money you’d like to save and grow, you’ll want to get the very best interest rate you can but within a product framework that meets your needs. Getting it wrong could mean that you’ll be wasting significant amounts of money in lost interest or have a product that it not really what you were looking for in terms of flexibility. Always use the AER (or annual equivalent rate) when comparing savings deals, because this will show you the true rate of interest once introductory offers and any fees and charges have been taken into consideration.

Savings Account Interest Rates Checklist

• How long could you accept your money being locked up for?  For the best savings account interest rates, the best deals often accompany restrictions on access to your money.  If this lump sum of cash is also your emergency fund, you will need to bear this in mind.
• How much risk of variable returns could you accept?  Savings accounts interest rates often improve if an element of risk is introduced.  If your interest rate is linked to stocks and shares, you will see a better return with a wise investment, but could risk making a loss.  You should always consult a financial adviser before proceeding with this type of investment.
• How much do you have available?  The savings account interest rates on some products are dependent on the amount you wish to deposit.  The most attractive deals often come with a minimum deposit, such as £10,000.
• How much expertise in savings account interest rates and related areas do you have?  As each bank will only be able to promote their own products, you may wish to consider employing an independent financial adviser to guide you to the best savings product for your financial circumstances.