Savings account can be of some variety. There are a few types of saving accounts, and they can have different options and features. As such, when selecting a saving account to invest in there are a few things worth noting.
The first thing that investors will note is that of the interest rate. The interest rate is the quoted percentage return for the savings account. Overall, these are quoted as an AER (annual equivalent rate). As such, interest is usually returned annually. Needless to say, the higher the interest rate the greater returns the saving account will provide. So, saving accounts with the highest interest rates are most recommended in this respect.
However, there are also a few things worth noting about interest rates. Firstly, that there are two types of interest rate. The first is that of the variable rate, which is interest that can go up and down. The second type of interest is that of fixed interest which will remain the same. Overall, fixed interest rates are usually higher interest rates, and are geared towards longer term savings plan.
It is also worth noting that some saving accounts may have limited offers, or bonus interest rates. These are short-term interest rates, usually approx 1 year, that are only relevant for that period. While bonus rates may be high, it will then drop to a lower interest rate hereafter. Also check the lower interest rate.
Ease of access:
The ease of access is also something worth noting before investing in a savings account. Some savings account can be easy access, while others are not. Some savings accounts may require that a deposit be left in an account for a particular period, with no withdrawals, before interest is returned. Any withdrawals from the account before the date can then have an impact on the interest returned.
ISA or savings account?
In the UK there are two types of saving accounts: ISAs and savings accounts. The difference here is that ISA accounts are tax-free while savings accounts are not. As such, ISA accounts are usually better. Therefore, this is something worth checking, and note the net rate of saving accounts.
Maximum and minimum deposits:
Finally, also note what minimum and maximum deposits are for the saving account. Some may have a high minimum deposit, while others may have a low maximum deposit. The more that can be deposited the better.
Overall, these are a few things to looking for when investing in saving accounts. Check the account terms and conditions, which should clearly quote the interest rate, ease of access, account type, and deposit conditions if any. If there is a very small small print, make sure it is checked!