Easy Access Savings Accounts
An easy access saving account is one in which you have just that; easy access to your savings. There was a time where any cash withdrawal from a savings account could take days and even weeks to process. Thankfully, these times are long gone and many savings accounts now offer instant access – or at least a short notification period before you can draw your money out.
Whether you decide to go for an easy access account or one of the traditional savings packages, your decision will likely come down to the decisive factor; how likely is it that you’re going to need to dip in to your savings?
If you intend to save over the long term, and you’re sure that your budget can handle any mishaps, there’s no real point in opening an easy access account. Banks will drop the interest rates on savings accounts where the holder can withdraw money at any time.
It’s an inconvenience to them. They’d much rather lend your money without having to worry about you needing it on a Monday morning.
So naturally, by opening an account which offers easy access to your funds, you can expect your interest rates to suffer slightly. It isn’t as bad as it used to be, but this is primarily because banks have found new ways to make a profit on the system.
Some providers will charge you for making a withdrawal. They might not charge directly, but rather take away your interest for that given month. On the surface, it’s possible that you could brush over this. But they do manage to make a tidy profit on the side by swiping what you’re due.
Other easy access accounts benefit from early contract bonuses. It’s important to distinguish between gross rate and AER (Annual Equivalent Rate). Some providers will boost their market appeal by offering, for example, a six month spell of increased interest.
By adding just 1% on to the interest rate for the “bonus” period, they can advertise the gross rate and make it seem as if you’re getting the same good deal for the duration of your time with the account.
Of course, the gross rate – what you’re receiving on the first day – isn’t necessarily going to match the rates at the end of the year! Bonuses can be misleading. But such methods enable new providers to make a splash as they bid to gain customers from the established names.
Most easy access savings accounts come with the option of receiving interest monthly or annually. There isn’t a huge difference either way, although most people prefer to receive a larger chunk at the end of the year rather than twelve barely noticeable increments.
If you’re unsure whether an easy access account is right for you, ask yourself simply; am I going to be using the money on a monthly basis? If the answer is no, and if you’re in it for the long haul, you should look elsewhere. However, if flexibility is what you’re looking for – you can’t do much worse than an easy access savings account.