In the event you haven’t started to save yet, here is your guide on how to start saving.
If you have debts such as an overdraft, credit cards, loans etc then it may be in your best interest to getting this paid off first. This is because the interest on the debts are probably costing you more money. You can also do both by splitting it equally or using a ratio that suits you e.g. 60/40, 70/30. The option is yours but get out of debt as soon as you can.
There are quite a few types of savings accounts so it’s important to pick the one that does the best for your money.
1. Bank account
Some bank accounts generally do better than ISAs & savings account in terms of rates they offer you when you keep your money with them. So don’t overlook current accounts if you’re thinking of saving.
2. Regular savings
This is when you pay a regular amount of money to the bank every month in return for a good interest rate. This can be better because in order to receive a higher interest rate you HAVE to put in money every month. These can usually start from £25 a month.
3. Fixed rate cash ISAs
The main difference between a cash ISA and a savings account is that a cash ISA isn’t taxed so all the money is yours to keep! You can put up to £20,000 in ISA in the tax year (this runs April 6th to April 5th).
However, if you decide to withdraw within the term you have agreed to you’ll be taxed so bear that in mind.
4. Cash ISAs easy access
This does exactly what it says on the tin. If you need access to your cash then this is best as there are no withdrawal restrictions.
5. Fixed rate savings
If you’re willing to keep your money hidden away without touching it then this may work for you. It offers higher interest rates than most because there isn’t usually much allowance in terms of withdrawal access
So the next time you want to open a savings account think about :
- What is this savings account for? Emergency fund? Holiday? Property? Wedding?
- How do you want to deposit money into this account?
- How much you are willing to deposit each month?
- How likely you are to withdraw money?
- How much you are likely to withdraw?
Let us know which account you think you’d choose and why it’s best for you.