So everyone is saying you should be saving more money, and obviously that’s always a good idea, but what type of savings account should you use that better suits your needs? There are several options available to you and it can be confusing to pick one without fully understanding the differences and similarities between them. And as saving your money under the mattress isn’t really a viable solution nowadays, let’s look at finding out more about each type of savings account and identify the one that’s perfect for you.
Fixed Rate Bonds
This is the most inflexible type of savings account available. It obviously won’t be suitable for everyone, but here’s how it really works. This type of savings account has 2 important rules: you get a fixed length on the agreement, meaning your money will be fully locked in for the agreed amount of time, and your return rate is fixed as well. So when you agree to a 2 year fixed rate bond you deposit your amount of money and forget about it for 2 years. You won’t be able to withdraw it, and when the 2 years are up you’ll get it back plus the exact amount of interest that was specified when you first made the agreement.
Regular Savers Accounts
These types of accounts will normally pay slightly better rates than instant access account, but you will have to regularly deposit money into them. Basically you decide that every month you want to save a small percentage of your income and regularly deposit it into your saver account. Pretty straightforward. There can be 2 types of regular savers accounts however, the term based, where it’s actually fixed by nature, and the other would be the transactional based accounts where you can both put money and and withdraw money when necessary. You need to make sure you are fully aware of the terms and conditions of these accounts.
Simple Access Accounts
Probably the most popular type, this savings account allows you to have access to it at any time. You may also know it under the description of a ‘rainy day account’ where you can save money with a decent return but also be able to have full access to it at any time. So if you have a money related emergency your funds are easily accessible. You may have a limit to how many withdrawals you can do in a year, but generally speaking, you’ll have access to your funds when you really need them. As always, make sure to fully read and understand the terms and conditions.
Saving money is always important, so look to create a savings account and deposit there regularly. We’ve explained some of the various options available to you, so hopefully you can now make an informed decision that will better suit your saving needs. Remember, a dollar saved is a dollar earned, so always look to deposit extra cash into savings accounts, they’ll add up and you’ll have access to it during a rainy day.