Many of us have some sort of savings account. However. We may feel unsatisfied with it, perhaps because the interest is low or feel that we should look to switching because there is a lot of talk about it. It is good to understand why it might be a good idea to switch so that you can decide whether it is worth doing.
Interest
The interest that is being paid on savings is probably one of the biggest factors in deciding whether to switch accounts or not. Most savings accounts pay a very low interest rate, but you could find that if you swap to a different account you could get a bit more. It is easy to swap and so it could be worth it if you get a bit more interest, even if it is just a bit. However, if you change the type of savings account that you have, then you might be able to get even more interest.
Ease of access
Many savings accounts will be instant access. This means that you will be able to get the money out of it right away along with any £100 loans you’ve recently take out.. However, there are accounts where you need to give notice to withdraw your money. These might require you to give a months notice, for example. There are others which are bonds. These will require that you keep your money in for a fixed amount of time, perhaps a year or several years. With a bond you may be able to withdraw early and lose the interest but some will not allow this at all. You will need to think about what will be convenient to you with regards to how quickly you think that you will need your money.
Amount you can save
For some savings accounts there are restrictions in the amount of money that you can save. Some will only pay interest on a balance up to a certain amount and some may require you have a certain amount saved before they pay interest. You may even have to pay in a certain amount each month to get interest. Accounts that have requirements like this tend to pay more interest but it is important to make sure that you are aware of how they work.
Tax
There are some accounts that are tax free. However, it is worth noting that many people can earn up to £1,000 in savings interest per year before paying tax. This will depend in their tax bracket though, so you will need to check whether this applies to you. If you are not paying tax on your interest then it will not matter how you save. However, some people will be paying tax and so they might benefit form finding a tax free savings account. These include ISA accounts and premium bonds. It is worth looking at them carefully though as some accounts could possibly have a better interest pay out even taking into consideration the tax you will have to pay on the interest. It is well worth investigating.
So, as you can see, it is good to consider a lot of things if you want to change to a different savings account. It is also well worth noting that switching accounts is easy. You will just need to withdraw the money form one to your current account and then use it to open another one. If your money is in a notice account or a fixed term bond, then you will need to wait before getting the money out though or else you will lose interest or a bonus which could be worth a significant amount of money.
