Compare Savings Accounts for the Best Returns on Your Money

When you go to a bank to open a savings account, the first question you will likely be asked is what kind of savings account you want to open. You should do your research on this because not all savings accounts are the same in the benefits they provide for customers. You need an account that meets your needs in the types of transactions you can conduct and the cost of these transactions as well as the amount of interest you will earn on your savings. You want the money you have in the account to work for you and earn money, which is why you do need to be informed about your choices.

In order to get the most competitive account, you need to compare various savings accounts with several financial institutions. While your own bank may tell you it is offering you the best possible deal, you should never take their word for it. Do your own homework and visit many sites to find out the types of savings accounts that are available. Each of the sites will have a chart in which you can compare the key features.

These include the interest rates and how many free transactions you can conduct each month. If this number is lower than what you usually do, then you have to compare the costs of additional transactions you will need to paying your bills. Look at the fees charged for making withdrawals from ATM machines and whether or not you can access your savings account from another country.

The Bank of England has raised interest rates paid on savings accounts in the past few years. This means that your savings were earning more money for you. However, in the present global financial crisis, these rates have fallen in recent months. These interest rates have fallen to an all time low, which means you are not getting a very large return on the money you have saved. In spite of this, many financial institutions are continuing to pay the higher interest rates, so it would be in your best interest to open a savings account in these locations.

Some of the savings accounts paying higher than usual rates of interest do require a minimum level of savings. If you do not maintain this level, then you will not benefit from the higher interest rates and it may cost you money to make withdrawals. You do have to check to see how many withdrawals you are permitted to make free of charge within a month or on an annual basis. If you can afford to leave your money in an account and not touch it for a while, then this type of account will be the best one for you to choose.

There are also differences in the ways banks pay the interest on savings accounts. Some pay annually based on the amount of money you have in your account at the end of each year. Others choose the anniversary date of when you opened the account to make the interest payment into your savings.

The problem with this type of interest payment is that although you do get a year’s interest at one time, your balance may be at its lowest at this time of the year and so you are not gaining the full advantage of the earning power your money can have. When you compare savings accounts, the best ones to look at are those that pay interest on the money on a monthly basis. This is especially advantageous if there are months of the year when you have more money in your account than at other times.

Some savings accounts also have a maximum amount of money you can have in your account.  The majority of accounts will allow you to start with an opening balance of £1 up to a maximum of £2 million. Of course the more money you have in your savings, the more you earn on it. If you do have a lot of money saved, then you should look for an account that pays a high rate of interest and does not have a maximum amount for the account.

Another item that you should use for comparison purposes when comparing savings accounts is whether or not the account has a guaranteed rate of interest. Some UK savings accounts have a guarantee rate of interest attached to them that specifies that you will definitely receive a rate of interest of 0.30% above the rates set by the Bank of England until a specified date. Right now that date is December 31, 2011, which tells you that your money has more earning power for the next few years. Hopefully by then the current credit crunch will be a thing of the past and the interest rates will have risen.