How to Choose a Savings Account

Photo Credit: WWarby

Today’s post is a guest post by Fred Schebesta who writes for Savings Account Finder where he helps people to choose the best savings account and term deposits.

While it is easy to spend all the money which comes in from your wages, and then some, today is the day you will start a savings plan and start using your money more wisely, for two reasons – firstly you’ll see how important it is to have a savings plan, and secondly you’ll see how easy it is to open a dedicated high interest saving account which practically manages and runs your savings plan for you.

Who Needs a Savings Account?

Not everyone needs a savings account, for example if you have a mortgage you should be directing your extra funds to pay off your debt before you start trying to earn interest on a savings account. Similarly if you are nearing retirement then an approved Retirement Savings Account will offer you better tax benefits and more attractive fee structures than a typical high interest savings account could offer in your situation. Instead, a savings account can benefit:

  • · Children learning to save. Opening a savings account for your child can be the best gift you will ever give them as you are starting them on the road to financial knowledge and stability. Learning to save is an important skill and the earlier you teach your children about making regular deposits and how compounding interest is calculated, the sooner they will be in control of their money, rather than having it control them in the form of credit card and uncontrollable debt.
  • · Young people saving for a house. A new home is a big investment and usually requires a big deposit too. Therefore, opening a high interest savings account can help you achieve the goal of a house deposit a lot sooner, as you can set up automatic transfers from your transaction account when your wages arrive so you are paying yourself first and allowing your house fund to regularly increase. You’ll also be earning a high rate of interest which is calculated daily and paid monthly so the more regular deposits you make, the more interest you will be able to earn on top of your own contributions.
  • Families looking for more fun. When you are managing the family funds it can seem like there is never enough to go around. Unfortunately this could mean missing out on family holidays, trips to the movies or new bikes for Christmas. Whatever your family’s goals are, a dedicated high interest savings account can help make them a reality because your savings account safely guards your funds, adds interest to them and makes for a simple place for your family to save together and achieve their goals.
  • · You there, with your dream purchase. If you have a dream purchase in mind, big or small, a high interest savings account can help make it a reality. By separating your savings from your everyday funds you are less tempted to spend the money you have so carefully saved, and you can instead watch it grow, contribute or reinvest it all online.

Features of the Best Savings Account

To achieve these savings goals you need to make sure you compare savings accounts and then choose it with your needs in mind. There is not one high interest savings account which is better than any other, instead you need to choose the account with the features, access, interest rate and benefits which suit you and your savings goal because the account which best suits you will be best suited to keep your savings on track.

How to choose the best savings account:

  • Choose the best interest rate. High interest savings accounts often offer a higher promotional interest rate to new customers, which later reverts to a rate which can be much lower. To make sure you don’t miss out on interest earning options, choose a savings account with an interest rate to suit your savings plan. If you have a short term savings goal which you can achieve in just a few months, a high promotional rate can help you get there in that time, however if you have a more substantial goal like a house deposit, look for the best interest rate over the long term.
  • Fee free savings accounts. A high interest savings account is opened and operated online and so should be fee free – not charging you for opening the account, or making deposits or withdrawals. However, to keep your savings entirely fee free, check the cost of transactions from your everyday account to your savings account – if you are being charged to withdraw funds to your savings account you are reducing your savings potential.
  • · Access the account your way. While high interest savings accounts are primarily online accounts, some can be accessed in branch. If this is  an important feature for you, the best savings account will be one with branch access, cheque deposits and over the counter transactions included for free.
  • · Understand all the account conditions. Some savings accounts will only pay you a high rate of interest if you make no withdrawals in a month and others require you to make a certain amount of deposits to be eligible for a higher interest rate on your savings. Therefore, it is important that before you decide which savings account really is best for you, that you have read and understood all the conditions of the account and you know that you can use the account within those conditions to achieve a high return on your savings.

A high interest savings account is an easy financial product to open and use, so make sure you follow our tips on choosing the best savings account for your needs, and you’ll have control over your money sooner.

One Response to “How to Choose a Savings Account”

  1. I would just like to add that some savings accounts give you higher rates for having higher balances. If you intend on keeping a large balance on deposit, this type of account may be best. However, the rate earned on these accounts may not be significantly more than accounts that offer one rate on all balances. Compare accounts before you choose.

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