Whether you’re thinking about saving money for the first time or are looking to switch over to a high yield savings account, figuring out what works best for you can be difficult. Everyone wants to make the most of their money, but with so many different savings accounts on offer, it’s easy to get overwhelmed.
This blog post can help you to organize your priorities, helping you to make the best decision for both you and your money. These are the most important factors you must consider before taking the plunge:
Amount of interest
The most important part of a savings account for most people is the amount of interest they can earn. Because interest rates are so low at the moment, it’s even more important to shop around and resist taking the first offer you come across. However, you don’t have to limit yourself to just using savings accounts and you could consider investing your money as well.
If you don’t have a lot of experience with investing, search for savings accounts that combine an element of investment with the act of saving. This gives you a more hands-off path to better interest that carries a lower risk, but isn’t completely risk-free.
Length of time
Some savings accounts require you to leave your money untouched for a specific period of time, which can result in higher rates of interest. But don’t jump at this chance if you’re not certain of whether you’re going to need your cash in the near future. Withdrawing your savings early can result in you having to pay a fee or losing any interest you made over a period of years. This means that fixed-term savings accounts only really work for people who are serious about long-term saving.
How often do you save?
If you save a regular amount each month, choose a savings account that will pay you an attractive bonus for your consistency. The amount you have to deposit might be a small or big number depending on the provider you pick, but it can help you to grow your money more quickly. However, if you have a larger amount that you need to deposit somewhere and aren’t planning to add more money to grow your balance, then this type of account won’t work for you. If you have a particularly large sum to put in your savings account, check to see if banks are offering more favourable interest rates for balances above a particular amount.
Why are you saving?
Everyone has a different reason for saving, but did you know that having a clear end goal can help you pick the right savings account? Whether it’s a house or an emergency fund, there’s an account out there that will suit your needs.
If you are saving to buy your first home, check if there are any accounts available to you that are specifically for this purpose. Or, if you’re saving for a child or dependant, speak to your bank financial institution about opening an account under their name.