Savings Talk

Whether you’re saving up for something in particular, or you just want to put money away for a rainy day, it’s worth considering a savings account rather than simply leaving cash in your current account. This is because generally savings accounts often have more favourable interest rates. This means your money has the chance to grow faster than if it’s sitting in a current account with a lower rate of interest.

There are a lot of different ways of saving, but online savings accounts can offer generous rates and can be convenient to use. 

One reason why online savings accounts could offer better rates of interest than other types of savings accounts is that banks and other financial services providers spend less money on running costs – so they could pass some of the savings on to you. In the same way, shopping online can often be cheaper than shopping in store.

As the name suggests, with an online savings account you manage your savings exclusively via the internet. This can be more convenient, as you can you can manage and keep track of your account when it suits you – 24/7. But if you like the idea of popping into a branch, an online savings account might not be for you.

To make the most of your savings, choose the online savings account that suits your needs:

• Fixed term accounts: you lock your money away for a fixed period of time during which you can’t make any withdrawals. The advantage of these accounts is that interest rates are generally higher, but you need to be sure you won’t need your money during the agreed term.
• Easy access accounts: you can take money out of your online savings account whenever you like, but the interest rate will probably be lower than a fixed term account.

• Fixed rate account: the interest rate you get is fixed. This gives you the security of knowing exactly how much you’ll get from your online savings account.
• Variable rate account: this is when the interest rate can go up or down (for example, in line with the Bank of England base rate but account providers can change it at any time), so you may get a good deal on your online savings account – but it can change.

To make sure you know exactly what you’re getting when you choose an online savings account, here are a few things to consider:

• What’s the best rate? With online savings accounts, it pays to shop around. Compare the interest rates on offer. Look at any bonus and introductory rates.
• Is the provider’s website easy to use? It’s important that you’re comfortable using the website for your online savings account. This will be the main way you manage your money. Are you happy with the level of security? What about the contact options?
• What access do you have to your money? Do you have to give notice to withdraw money from your internet savings account? Check the notice periods as this may be an issue if you need immediate access to your money in the future.
• Can you speak to someone in branch? With many online savings accounts you do not have the option to speak to someone in branch, or even over the phone. Consider whether this would bother you or not.
• Are there any fees or other charges? Will you be charged for making withdrawals or can you earn more interest if you don’t withdraw money for a certain time?
• What are the minimum and maximum sums you can invest? Can you add to your deposit after you’ve opened the account or do you have to save a lump sum?

Looking for an online savings account that’s quick to set up and easy to manage? Find out about Post Office Online Saver.