When choosing a savings account its important to check that the features that the account has to offer and not just the headline interest rate. Choosing the right account can help improve the returns that you recieve.
Its worthwhile taking the time to compare savings accounts on a regular basis to make sure your making the most of your savings with the best interest rate possible. When choosing an account you should always look out for any restrictions.
Accounts with restrictions are not always suitable for everyone, it really just depends on how you are planing on using the account. For example some provider will charge you for making withdrawals which be perfectly fine for those who dont plan on touching their savings for a long term, but for those who dip into their savings on a regular basis could seriously reduce their returns.
If you take the time to read through the details on the account and make sure you are aware of any restrictions will help you make the right choice for your savings.
Important restrictions to Look out for
Its important that you read the small print carefully before you open any account, there are many types of restrictions on savings account but these are the most common ones to look out for:
Notice Periods
Some savings accounts will require a notice period before they will inssue you your money, these are usually reffered to as notice accounts and are not ideal for those who need easy access to there savings.
Withdrawal Restrictions
There are often restrictions on withdrawals, even some instant access accounts will sometimes have a limited number withdrawals permitted. Some providers will either reduce or wipe out any interest should you go over your permitted number of withdrawals. So be careful if you are likely to to need to withdraw money often.
Balance Restrictions
Most accounts usually have a minimum first investment amount, this can be anything from as little as £1 upto £1,000 and sometime more. Some accounts also have a required minimum balance, which means if your account balance drops below the minimum you will lose out on interest as your interest rate will drop. These accounts are only worth choosing if you can be sure that you can keep your balance above the minimum requirement.
Deposit Restrictions
Some saving accounts will require a minimum deposit every month. This means you will have to make sure that you have at least the minimum requirement being deposited into your account on a monthly basis. These can help you get into the habit of saving each month although you must be carful as if you dont manage to keep up with your monthly deposits your interest rate may drop or you maybe even end up with the account being closed.
You should always watch out for accounts that offer introductory bonuses, although these accounts may offer some great interest rates its important t o remember that the rate will most likely take a huge drop when the introductory period ends. If so you would be better off switching to another savings account.
Reading The Small Print
When choosing a savings account it important to make sure you carefully read the small print, this can help you avoid any unexpected charges or penalties. You should always consider whether the terms and conditions will affect your returns as another account could suit you better.
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