08:15 16 November 2013
Whether your extra cash is for emergency purposes, for regular savings or for future plans, putting that to an account where it can earn interest will determine which account your money should be invested in.
Types of Accounts
•Instant/ Easy Access Accounts
This savings account is the most appropriate for emergency purposes. The rate of interest is higher than current accounts and it provides you the opportunity to withdraw money whenever you need as well as add more money to the account.
•Regular Savings Accounts
For a person who saves regularly, this is the most suitable savings account. Even though this account offers higher rate of interest the downside is you are not allowed instant access of the account without paying a penalty. Most often, the advertised interest rates are not always true either. The interest rate advertised by the bank is applicable only to the balance of your account at a certain time and not on the actual balance after a certain period.
•Fixed Term Accounts
If the saver is certain he does not need the money in the near future, this savings account is better in terms of interest rate. This account will be like hitting two birds with one stone. You can keep your savings protected and at the same time are able to earn high interest.
The thing to monitor here is that it automatically rolls over into a fixed term when it reaches its maturity. Likewise, there will be a penalty charge for early withdrawal or if the account is terminated before its maturity. Furthermore, if the interest rate in general savings has risen up, the interest rate of the account cannot enjoy the same because the rate is fixed already since the outset of the account.
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