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Here at money tips we believe in informing our users about
the many types of savings accounts that are available on the
market. Below you will find information on some of the accounts
that are available now.
Easy access accounts provide access to your savings
instantly or within a few days without a penalty. Due
to this flexibility a lower variable interest rate will
be offered. These accounts are particularly suitable
as an emergency fund, providing easy access, a way to
start saving and some accounts offer a cash card facility.
A bonus scheme may be offered if the number of withdrawals
made are within a specified limit, for example a maximum
of 2 withdrawals per annum. The minimum investment is
normally £1.
Notice accounts generally pay higher rates of interest and
require notice to be given before withdrawals can be made,
typically 30, 60, or 90 days. Savings can sometimes be accessed
immediately subject to a withdrawal penalty. The interest
rate is variable and the minimum investment required is often
several hundred pounds.
Bonds or term accounts will pay more competitive rates, they
require your investment to be tied up for a specific period
of time and withdrawals before the maturity date are often
not permitted. If withdrawals are permitted without notice
there will sometimes be penalty charges. The interest rate
is often fixed and the minimum investment is generally £1000
or more.
These accounts are to encourage regular savings, they require
a commitment to invest each month. Many regular saver accounts
will not permit lump sum investments. Access to savings varies,
some accounts may provide instant access or require notice
and others may be fixed term. Generally regular saver accounts
place a restriction on the number of withdrawals allowed each
year. Interest rates are variable and a minimum and maximum
investment per month is sometimes stipulated, these vary from
between £10 - £20 min and £100 - £2000
max.
Technology is allowing banks to operate on lower margins and
pass on better interest rates on savings and current accounts.
It has also facilitated sweeper accounts, which transfer cash
between different accounts to ensure the customer pays the
lowest interest rates on debt and receives the best returns
on savings.
Woolwich's Open Plan account allows customers to set an upper
limit on its current account. Any money beyond this will be
swept into a savings account. It is also possible to set a
lower level and, if the balance drops below this, money is
automatically moved across from savings.
This is likely to be a growing trend in the future as
banks look to pick the customers they believe will be
most profitable. Cahoot, the internet bank from Abbey
National, has a range of interest rates available that
are based on customers' credit records.
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