Naturally many people who find themselves in the fortunate position to have some spare funds at the end of the month select to open a savings account as a no risk way of making money generate additional income.
But with such a plethora of options on the market today it is difficult for consumers to pick the correct solution; hopefully the following article will make the decision far easier and simpler. Fundamentally savings accounts fall into five distinct categories.
The first of the savings account options is the instant access account. These are the perfect way to have ready funds at your disposal, best should an emergency situation arise. This access is available in different ways; some account packages have the option for a cash card that can be used in ATMs although ATMs typically have a limit on the funds that can be withdrawn in any twenty four hour period.
In cases of extreme financial emergency, it may be required to visit the bank in order to withdraw the correct amount. Many on the internet account packages offer the best rates of interest even though it should be remembered that online banking won’t have the same benefits of being able to visit a local branch to withdraw funds.
The second form of savings account is the notice variety. In most cases an account that has a notice period for withdrawal affixed to it will have superior rate of interest. This is because the banks are keen to give savers an incentive to lock away their funds for extended amounts of time.
While the interest rates are great on notice accounts the downside is that to withdraw funds a period of up to ninety days must be fulfilled before the funds become available; typically a penalty charge will be added should the money be needed sooner. This type of account however has become less popular as instant access varieties now offer equally attractive interest rates.
Cash ISAs (Individual Savings Account) have become extremely popular in current years as they offer the account holder tax free interest, the downside is that only a certain amount of money can be entered into the ISA in any tax year.
ISAs rarely have the ideal interest rates although losses in direct interest are soon surpassed by the benefits of tax free interest. Subsequently the gross rate on an ISA is typically superior than a regular savings account.
The fourth form of savings account is the regular variety. This type of service is specifically designed for people who have a certain amount of money to put away each and every month. Banks are happy to offer high rates of interest, especially to customers who hold current accounts with the same bank.
Additionally some of the regular saving accounts will give the holder an annual bonus for meeting saving targets, in contrast failure to meet the targets can result in penalties.
The final form of savings account is the national type. These are sponsored bonds and accounts that have the security of the national finances behind them. While interest isn’t great, the funds entered will at least be safe.
Hopefully the presentation of these five types of savings accounts has given consumers a superior understanding of which to select. Through a careful and conscientious approach it is possible to weigh the benefits and downsides of each and then make the correct decision.
About the Author
Financial expert Thomas Pretty the types of savings account on the market and how consumers can make the most suitable decision when choosing one.
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