They’re certainly not traditional accounts, and they don’t usually come with over the counter, or cheque facilities. But, what these accounts lack in extra features they more than make up for in high interest rates.
They are simple, uncomplicated savings accounts that will help maximise your savings without piling on the extra fees. Nearly all banks, building societies and credit unions offer online accounts, so check out our tips and get started!
1. CHECK THE RATES
Banks love their customers to have online accounts because they mean very low costs. That’s why banks will reward you with a compounding interest rate of 5-6%, which is generally calculated daily and paid monthly. Just remember to check the actual rate that applies - as it is variable not fixed - and can fluctuate up or down at any time.
2. READ THE CONTRACT
Make sure you read the fine print when signing up. Most online savings account need to be linked to an everyday transactions account, be it with the same bank or a different one. While the online account is fee-free, they may attach charges to the standard transaction account.
3. LOOK BEYOND THE HEADLINE RATE
Banks usually entice new customers with high interest introductory offers, but these high rates usually have an expiry date. In some cases they can even go down by 1.5%. Make sure you separate the wheat from the chaff by calculating the total interest you stand to earn.
4. DO YOU MEET ALL THE CRITERIA?
Double check that the headline rate will actually apply to you. The best rates are sometimes only offered to customers who meet certain criteria, such as agreeing to make no withdrawals throughout the month.
5. FOLLOW THE RULES
By strictly adhering to the conditions attached to your account, such as making minimum monthly deposits, you can force yourself to make great savings. Use the high interest rate on your savings account as an incentive to make regular deposits and build up your savings nest egg.