Savings Accounts Information Guide

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A savings account is set up for the purpose of accumulating funds over a period of time. The deposited money can be kept in a bank, building society, loan association or any other savings institution.
Interest is earned on the funds deposited in the savings account. Funds may be withdrawn only by the savings account owner or an authorised agent.

There are Tax efficient savings accounts which enable savings to be held in the form of stocks and shares, cash or life assurance or any combination of these asset types.

Considering the different saving options:

• If you like taking little or no risk with your money then basic deposit accounts may not promise the highest returns, but they do provide security.

If instant access to your money is not a problem then you will find a range of options:

• No notice accounts tend to offer slightly better rates than instant access accounts. The account is usually run via telephone and/or post, and your money can take a couple of days to reach you by cheque or transfer.
• Internet-only accounts offer flexibility for web-surfing savers. Costs to the provider are low because their is little paper work etc and so they can often provide competitive rates in comparison to other types of savings accounts. Should you prefer the extra security of being able to talk on the phone then you should check to see if this option is available to you and if it is will you be charged for the calls. Understand how you are able to get your money out should you wish to. Many accounts offer higher introductory rates.
• Notice accounts will usually pay you higher interest on the basis that you give notice for any withdrawals. It is usually the case that in order to obtain the higher interest you agree to wait between one and three months to get access to your money, this means that inform your account provider that you will be withdrawing your money one to three months before you actually do withdraw it. Many Notice Accounts do offer instant access, subject to an interest penalty - of between 30 to 100 days - on the money you withdraw.
• Fixed rate accounts or savings bonds tie up your cash for between one and five years or until a specified date can secure the certainty of a fixed return. Accounts can usually be opened with between £1 and £5,000. As with notice accounts, early access to capital in these accounts is not usually permitted without incurring an interest penalty.
• At the other end of the spectrum are schemes based on stockmarket performance. These offer the potential of higher returns when the market is good. You should be aware before investing in such schemes that your money may not grow at all and you may not even get all your original investment back.