Saving Account

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Regular savings accounts are likely to produce the best deals where interest rates are concerned, and they’ve been around for a long while. It isn’t quite as simple as that though. As you can probably imagine, excellent interest rates come at a price. In the case of a regular savings account, that price takes on the form of commitment.

By opening a regular savings account, you’re committing to save a certain amount of money on a regular basis. Many people choose to open savings accounts and then add funds when the money is readily available to them. While this is possible with a regular savings account, to truly take advantage of the high interest rates, you have to be saving monthly.

You could argue that it’s a blessing in disguise. Being committed to making the maximum interest might just help you stick to your saving plans. If you can’t keep to it, however, you’ll find that your account is rapidly switched to the lower interest rates and you’re suddenly no better off than the rest of us.

It’s important to realise how significant those interest rates are though. Regular savings accounts perform far better than easy access accounts. You’ll also find special bonuses as an incentive to take the plan.

Some banks will offer inflated interest rates for a short period of time after you’ve signed up. These can be anywhere from the 7% to 8% region. It’s not unknown for some banks to offer a whooping 10%! Don’t be jumping on the phone just yet though, because yes, there is small print. Lots of it.

In order to stop people taking advantage of the initial bloated rates, monthly caps are installed. £250 is the typical amount that you can expect to be limited to. That’s still a hefty sum for a lot of people though, so taking advantage of the initial interest rates can be extremely prosperous.

Once you’ve arranged your regular savings account, you’ll be expected to pay in the money on a monthly basis. This can be either manually done or automated through your bank.

And it’s this security that enables the savings account provider to offer such good interest rates. They can budget in to the future knowing that they’ll have your steady stream of savings to work with. You’ll find yourself rewarded for reliable saving activities, and possibly penalised quite heavily - through interest rates as mentioned - if you start messing with your monthly transactions.

Withdrawing money is fairly simple, although you should be aware that if you’re still under an introductory bonus offer, it’s likely to mess with your interest accumulation.

Many people opt to take advantage of these bonuses and then move their money in to the next account! It’s a fairly time consuming process and much more hands-on, but with interest rates so high, you can’t really blame them.

If you feel that you can commit to an unwavering monthly “payment”, a regular savings account is an excellent place to store your money.