Perhaps you have a New Year’s Resolution to open a new savings account this year. With so many products on the market, it can be quite confusing when looking for the right savings account. The Money Advice Service have some tips on how to narrow your search for the right savings product...
Set A Savings Goal
Think about what you are saving for. If you are saving for a long term goal, such as buying a house, then fixed-rate accounts with higher interest rates may be the right option. If you want to cultivate a smaller fund for emergencies, then you will need an easy access account, which will yield smaller returns. By identifying targets, you can begin to narrow down your search to specific types of savings accounts.
Don’t be lured in by bonuses and free gifts; do your research. There are many different websites you can visit to compare savings accounts, however to fully explore your options we recommend talking to financial advisers, such as ourselves, so that your goals and personal circumstances can be fully taken into account.
Look at Regular Savings Accounts or Fixed Term Deposits
Regular savings accounts or fixed-term deposits provide more interest than many others, however they may involve locking your money away for a long period of time, or restrict access meaning you cannot withdraw cash immediately.
If you do not pay income tax, you may wish to have your account interest paid gross, otherwise tax will be automatically deducted. Tax payers can earn interest tax-free in a cash ISA.
Spread Your Cash Around
Any cash deposited into a UK bank or building society is protected by the Financial Services Compensation Scheme (FSCS). The savings protection limit as dictated by the FSCS is £85,000 (or £170,000 for joint accounts) per authorised firm. This means that if you have more than this amount stored with a single firm, you will not be compensated should anything happen to it. You may also want to split your cash between easy access and longer term accounts so that you are earning a good amount of interest, while still having access to a portion of your cash.
If you would like more information on selecting the right savings product for you, please get in touch. Our experienced advisers will be happy to help.