Savings Accounts: What to look out for?

From next Tuesday, 6th October 2009, anyone over the age of 50 will be able to top up the amount they save in their Cash ISA from £3,600 to £5,100. The theory behind the increase is to encourage the British public to save more by increasing the amount we can save without paying tax. Important message especially as the number of savers has receded this month by 6% and 43% of working adults would not have sufficient funds in place to survive more than three months should they lose their jobs, according statistics compiled by Credit Action.
 

However some concern has been raised as to the expected take up of the new ISA limit. The online magazine, This is Money reported this week that savers in the over 50 age bracket had not been making the most of previous ISA limits. By their reckoning, if savers had been saving the maximum amount each year since they were introduced in 1999, they should have a balance of more then £30,000, however Halifax have found the average over 50 ISA saver has a balance of around £11,288.


The ISA is not the only savings account on the market which can offer an attractive deal. Ensure you compare the Interest rate of an ISA to other types of savings accounts as you could find your money will earn you more interest after paying tax. So it’s always worth considering all the options available:



Notice Account –

The basic explanation for this account is that you have to give a set period of time as notice before you can make a withdrawal. This is great if you have no intention of touching your savings in that period but if you do need your savings in a hurry then you are likely to be penalised for the withdrawal. Generally, the longer the notice period the more competitive the interest rate.


Bonus Accounts - 

Bonus accounts are exactly that, accounts that offer bonuses to customers who comply with certain account restrictions. This could be restricting the number of withdrawals per year or only allowing a maximum amount to be deposited each month. Due to the bonus being awarded for a set period of time, it would be wise to keep an eye on your saving account and move it when the bonus period ends, should a better rate be available.


Fixed Term Saving Accounts –

Also known as a fixed term bonds, these accounts are no good for savers who set aside a set amount each month but brilliant for those who have a large initial amount of money to save and are happy to lock it away for a longer period of time in order to achieve a higher rate of interest.



Saving for that rainy day has never been more important in these uncertain times so check out all the options and make the most of whatever cash you can spare.
 

Moneyextra.com recommends you take independent financial advice before acting on any article

2009-10-02 12:47:31 © Moneyextra.com