When it comes to finding the best savings accounts, it pays to shop around before making your final decision.
Like shopping for insurance, cars or, well, anything, doing your research and comparing what you get when you commit will set you in good stead for the future.
In this article, we will explore what it means to compare savings accounts, what you need to consider when shopping around and how to get the best deal.
Why Should You Compare Savings Accounts?
Savings accounts in the UK might all seem similar, but depending on your chosen bank, you may receive different benefits and interest rates.
To make the most of your savings, it is wise to shop around and regularly check your interest rate. Otherwise, you could be losing out on hundreds of pounds each year, depending on how much money you’ve got saved.
Similarly, some UK savings accounts offer bonus incentives or lower fees, helping you grow your savings faster.
The problem is banks frequently update their offerings. So, what was a good deal a few years ago is likely not so generous now. Reviewing your options ensures you always get the best deal – and that your money is working for, not against, you!
Factors to Consider When Choosing a Savings Account
Ready for a spot of shopping? Here are some factors to keep in mind when looking for the top savings accounts.
Rates Go Down With Time
Many high-interest savings accounts offer temporary bonus rates or balance-based interest. A withdrawal from the account could reduce your earnings and, in general, rates may drop over time.
This is normal and you can combat drops by tracking your rate’s duration and being ready to switch, if you see a better deal in the future.
How Much Access You Need
The best savings accounts often have restrictions, such as fixed terms or limited withdrawals.
These formats have pros and cons. For example, limits can help stop impulsive spending, but it also means withdrawing your savings in an emergency may come with interest penalties.
Look at your spending and be realistic about whether you can lock away your savings for up to a year or longer.
Remember Building Societies
Building societies are owned by savers, not shareholders, meaning they focus on long-term value rather than short-term deals.
In general, building societies offer fair, competitive rates to all members. If you want steady savings returns without the hassle of frequently switching accounts, a building society could be an excellent option for your savings.
Learn more about the different types of UK savings accounts here.
Consider The Bigger Picture
A competitive interest rate is often seen as the most important feature of a savings account, but it is also essential to consider any other benefits of your chosen account.
Can you manage your savings online with an instant-access option? Or will you need to call the bank to access them? Do withdrawals have extra fees? Are there any non-savings benefits, like travel insurance or an annual railcard or does the account come with high annual fees?
As you can see, there are a range of account features to consider, so don't be too fixated on just the interest rate.
Choosing a Savings Account: Final Thoughts
Choosing the right savings account will take some research, but with these tips, you can simplify the process and quickly find the best option for you.
Why not brush up on your personal finance knowledge before you begin?
Read more about savings, debt and modern finances on the CashAsap blog now.
