Maximise your Savings with a High-Interest Online Savings Account in the UK

by Malini Mathew Writer

Choosing the right savings account can help you beat inflation and build a substantial savings pot. Here’s all that you need to know to pick the best high interest-earning savings account in the UK.

High-interest earning savings accounts are one of the best ways to get your savings to make some extra pounds, helping you build a huge savings pot over the years. There are plenty of options to choose from. Here, in this guide, we help you pick the right one that works for your financial goals.

First things first,

What is a Savings Account?

Simply put, a savings account allows you to deposit money into it, and the amount you have deposited earns percentage-based interest regularly. The rate of interest determines how much money you earn more than what you have invested in it. It depends on several factors like:

●        The amount you have deposited in the account

●        The interest offered by the bank

●        How regularly you add money to the account

●        And, the period or frequency of interest computation

Who can use a Savings Account?

A savings account is ideal for all those who wish to save. Whether you have some extra cash left over in your monthly budgets or you wish to inculcate the habit of saving, a savings account is a good choice to boost your savings.

What are High-Interest Savings Accounts?

As the name implies, these are similar to regular savings accounts. But, the one difference is that they offer higher income rates, thereby increasing your earning potentials.

What should you look for while choosing a High-Interest Savings Account?

There are several factors to consider while picking the right savings account that maximizes your returns. Here are a few top factors:

1. Minimum Deposit Requirements

All savings accounts have minimum deposit requirements. While some accounts have amounts as high as £1000, others have amounts as low as £0. If you don’t have a large amount to deposit initially, then it pays to look for accounts with low minimum deposit requirements.

2. Withdrawal Limits

A few savings accounts restrict the number of withdrawals you can make in a financial year. When you exceed this limit, you have to pay a fee or your interest rates may decrease. Make sure to consider the allowed withdrawal limits, to avoid disappointments later on.

3. Introductory Bonus Rates

To entice customers, banks offer introductory bonus interest rates. These are higher than the regular interest rate and are usually offered for the first year. Make sure to check the actual interest rate to know what you will be getting in the long run and avoid confusing it with the introductory bonus rate.

4. Interest Frequencies

Some savings accounts pay interests annually, while others pay the interest monthly or only during the maturity of the account. While this doesn’t impact your overall savings, if you are looking to use the interest earned for meeting regular expenses, then choose a high-interest online savings account that pays the interests frequently.

5. Consider the Tax Implications

If you are a regular taxpayer in the UK (the basic rate of 20%), you can have a Personal Saving Allowance up to £1000 annually, without paying any tax on it. Make sure to check your tax implications to decide how much money you want to save in your savings accounts.

The Final Word

High-interest savings accounts are a great way to build your savings. Make sure to shop around, compare the offered interest rates, and check the other factors listed here, to pick the right fund that offers the best deal for you.

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Created on Sep 18th 2019 01:13. Viewed 629 times.

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