U.K. Savings Advice: What You Should Know
For those looking for a short term, low risk way of saving money, you should seek savings advice from a professional financial adviser in order to review your options. One way to begin saving is by means of a personal savings account which generally offers higher rates than most current accounts. In most cases, you’ll likely receive back what you have deposited, plus accumulated interest.
Savings Accounts Explained
To get the most out of a savings account, there are many variables involved in order to receive a respectable return. These factors include the duration in which your money is left in the account, the amount in the account, and the interest rate given upon opening the account.
Savings accounts are usually accompanied with a spectrum of features which can be confusing for someone who is looking to open their first savings account. The many options which to choose from can be a little overwhelming to most that lack financial knowledge. Also, be aware of account restrictions that can be placed on a savings account; these restrictions are commonly overlooked when opening a new savings account. It’s best to seek out savings advice from a financial adviser in order to understand what type of savings account suits your needs.
Alternative Savings Schemes
Ultimately, your financial goals will determine the type of savings account that best suits your current financial situation. Options such as easy access to your cash can limit your options to the savings accounts that are available to you. If you want to save for any purpose, long or short term, there are many savings accounts that will meet your specific requirements. The following are a few of the more popular savings schemes that you might want to consider.
- An ISA (Individual Savings Account) is a tax free savings account in which income tax is exempt. As of recent, you can contribute up to £10,200 for each tax year, inclusive of stocks and shares, with maximum of £5,100 deposited into a cash ISA. To open a cash ISA account, you must be a resident of the UK and be older than 16 years of age, and 18 years or older for a stocks and shares ISA.
A Deposit Account/Instant Access account allows you access to your money on demand. This is one of the more popular accounts by many, and it also pays out a higher interest. This type of savings account is good for short term savings, without the need for a cheque book.
- A Fixed Notice Account is somewhat comparable to a deposit account besides the fact notice is needed in advance before withdrawing your money. The notice can be anywhere between 30-90 days, depending on the plan. Because of this, the interest rate given for this type of account is usually higher than most. However, instant access can be made to your funds, but expect a penalty fee or interest rate cut.
A High Interest, Regular Savings Account is a good choice as long as you’re willing to keep a minimum balance in the account. This is put in place to promote the practice of saving, which many people have trouble doing. Be sure to talk to a financial adviser for savings advice before opening up a high interest savings account.