High Interest Accounts

There is no hard and fast definition of what High Interest Accounts are. Suffice to say that unless the account you are looking at is offering a gross interest rate return that is at least higher than the Bank of England's base rate then it will not really qualify as a high interest account.

When you begin your search of high interest accounts to find the right home for your money there are a number of issues you need to take into consideration. High interest savings accounts can be hedged round with rules regarding when and how you may access your money.

Lengthy notice of withdrawal periods are common. It is usually the case that the longer you are prepared to tie up your money, the greater the return on offer. Some high interest accounts will stipulate a limit on the number of withdrawals you may make in a 12-month period.

A number of high interest accounts require a regular savings commitment and, unless you keep up these regular payments, you will lose the high interest rate on offer to be substituted by a much less attractive return.

Some banks and building societies also market what they call high interest current accounts - paying interest on the money held in your current account. However, to take advantage of the high interest on offer, you will usually be required to maintain a substantial minimum balance. Unless you are able to do this you may be better off putting your spare cash in an ordinary high interest savings account.

It is now a fact of life that most of the best high interest accounts are now available via the internet rather than through the high street branches of the financial institutions.

Which is the best savings account for you? Let Moneyextra guide you to the right choice with our comparison service .

Last Updated: June 2007 © Moneyextra.com

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