Times are changing in the savings world. We often ask ourselves why aren’t people saving like they used to. What are the reasons?
Is it because the days of door to door insurance companies collecting £2 a week for savings have gone? Or is it because we now have access to competitive savings plans? Or is it simply because people are now living off credit instead of saving up for something?
What is a savings account?
A savings account is a safe haven for our hard earned money. It allows us to safely deposit funds and allows us to earn extra money on our savings by offering interest. Different savings accounts will have different interest rates and benefits, and it will be up to you to find out which account will be best for you in the long-term.
Savings accounts are an easy way to save up for lifetime goals, luxuries or ambitions. More expensive things such as deposits for mortgages, cars, holidays and/or retirement are common reasons for investing money into savings accounts.
The interest available is usually decided dependent upon income tax, however by choosing to invest in an ISA there is the possibility of saving up tax-free.
5 Benefits of a Savings Account
• They offer better interest rates than say a current account
• Banks and building societies compete ensuring better rates for savers
• Some savings accounts offer bonuses on regular/large deposits
• Agreeing not to make any withdrawals can result in further bonuses
• Online savings accounts offer better rates than in-branch accounts (less overheads)
5 Disadvantages of Savings Accounts
• Sustained periods without access to your money
• Interest rates can weaken over time unless set at a fixed rate
• Fixed interest rates could limit the amount earned if the basic interest rates rose
• If the account is stocks and shares based they could diminish with the fall in stock value
• Large penalties sustained for obtaining money before specified amount/time
So here are just a few basic pro’s and con’s that should be considered before investing any money into savings accounts.
A good savings account should be of minimal risk with maximum financial gain. They are more difficult to find than you might think however speaking to a financial specialist would definitely be advantageous and recommended.