Getting the best possible savings account rates

Whether you're looking to take out a savings account for a particular purpose - such as to build up a deposit for your first home - or you just wish to put money away for a rainy day, you will want to ensure that you're getting the best savings rates to ensure your cash is working as hard as possible for you.

Vital to achieving this is being able to secure the highest possible rate of interest, as this will ultimately have the most impact on the returns you receive on your money.

But while you may be attracted by the headline rate advertised with one particular product, it is vital you take the time to thoroughly research the market to get the deal that is best for you.

Depending on your individual needs, some savings accounts may be more suitable than others but one thing that will ring true with whatever one you get will be your desire to secure a good rate of interest.

For this reason it is important that you compare products from a range of providers before making your decision about which to select.

You'll find that many accounts display the gross amount of interest payable, but as tax is deducted from interest before it is credited to your account you should look out for the net rate when comparing different deals in order to get a better idea of exactly how much you will earn.

However, opting for an individual savings account ISA allows you to save a certain amount of cash each year without having to pay tax, meaning you get to keep all the interest that your money earns.

Indeed, you may discover that taking out an ISA that has a slightly lower interest rate instead of opting for the more attractive-sounding gross rate applied to a regular savings account actually offers greater rewards when the tax is deducted from the latter.

When searching for the most competitive savings rates on the market, you will need to make the decision about whether to choose for a variable or fixed-rate product. The latter can provide a guaranteed amount of interest on your earnings, however as variable products are linked to the Bank of England base rate, in the event the Monetary Policy Committee chooses to increase rates you could receive even more interest.

While looking at the headline amount of interest being promoted, it is important to remember that some of these can only be achieved if you meet certain criteria. For example, regular savings accounts require you to deposit money every month, while others may only be opened with a certain minimum investment.

Alternatively, some providers reserve their best deals for those who have taken out a current account or some other banking product with them.

In order to obtain the most attractive deals, you may have to ensure your balance stays above a certain level. Should it fall below a threshold, the interest you receive on your money could quickly revert to a nominal amount.

You may also find the interest earned depends on how many withdrawals you make. While some accounts allow you to take as much money out as you want whenever you like, others will impose limits or penalties for doing this. For example, you may be unable to qualify for a bonus or special rate should you decide to take out cash more than once from your account over the course of a 12-month period.

If you're saving for a rainy day and think that you may need quick access to your money at short-notice - perhaps in order to pay off a larger than expected bill - it may be an idea to concentrate your search for competitive savings deals on instant access accounts.

However, should you have enough disposable cash that you are confident you can leave untouched for several years, you may want to take out a bond. These often have higher rates of interest than other savings accounts, however once you have made your initial deposit you won't be able to withdraw any money from it until expires.

Using a price comparison site can be a great way to find the most competitive deals around but no matter what kind of savings account you want to take out, make sure that you carefully read the terms and conditions to find out what exact criteria you have to fulfil and if there are any restrictions you need to be aware of.

In taking the time to research the market, you should be able to secure a saving account that is not only suitable for your needs but also offers an extremely attractive rate of interest.

savings interest rates

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2011-05-26 15:51:24 © Moneyextra.com