Starting to save
Thursday 30 June 2005
There are different ways of saving money, ranging from shoving underneath your mattress to having a high interest account.
What are you saving for?
How you save depends on why you're saving. If you need to get a short amount of money together over a relatively short period of time, you'll want an account where you'll be able to access your money easily.
If you're saving up a large amount of money and don't need to get your hands on it at a moment's notice, you might find that interest rates are higher, meaning that you money will earn more for you while it's in the bank. Let's take a look at what's out there...
Instant access accounts
These are for people who aren't saving for anything in particular, but just want to put some cash away in case they see anything they fancy! You can pay the money into the account in lots of different ways, and you usually have to go into the branch to make a withdrawal or transfer the cash over the web or by phone into your regular account.
Because you can get your cash whenever you like, interest rates aren't as high, which means that your money won't be earning as much as it might have done if you had another type of account. Many banks offer paper-free accounts, with higher interest rates being offered if you take this option.
Notice accounts
If you choose this account then you have to give a number of days' notice before you can make a withdrawal. This might be a good option if you are saving with something in mind, and aren't too worried about getting your hands on you money at a moment's notice.
If you need to take money out in an emergency, this can usually be done, but you might have to pay a fee or lose a number of days' interest. Usually, the longer you leave your money, the more interest you earn on it.
Regular savings accounts
If you're saving for the future, some banks offer this type of account, where you pay a certain amount, usually monthly. You may be restricted on how often you can take money out, but there can sometimes be bonuses for leaving your money in there.
Shop around
Different banks and building societies offer a variety of interest rates. Some offer fixed rates (so the interest you're paid stays the same for a certain period), while others change the rates in line with inflation. It might be a good idea if you shop around to get the best interest rate, so that you'll be earning more money while your hard-earned cash sits in the bank working for you.
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