Created by: Dave Harland | 29 May 2019

How and why you should open a savings account

After the Bank of England increased the base rate to 0.75% in August 2018, a number of high-street banks started to increase their savings rates, meaning it’s a better time to open a savings account now than it has been for several years.

Recent figures show that saving account rates are at the highest they’ve been since 2012, averaging at 1%. This is 0.4% higher than the average rate offered by instant-access accounts.

What is a savings account?

A savings account is provided by the bank and allows you to keep your money safe. There are lots of different accounts out there but generally speaking, a savings account can help you grow your money by earning interest over a certain time.

How do I choose a savings account?

Before choosing a savings account, you should think about how long you’re looking to save for and whether you’ll need access to the funds.

  • Start by visiting your local bank or building society and explain your financial needs.
  • Compare competitors and interest rates.
  • Ask about any additional fees and hidden terms and conditions.
  • Open your account online or in branch.

Why should I open a savings account?

  • Having your money in a bank instead of a piggy bank provides an extra level of protection.
  • You could increase your money by earning interest.
  • Savings can be used in times of need and could stop you going into debt during an expensive crisis.
  • Having a savings account can help you to become more aware of your spending and financial situation.

Thinks to keep an eye out for

  • If you’re opening a savings account, you’ll probably want the highest savings rate but watch out for short-term high rates that end after the first 12 months.
  • Many savings accounts come with a minimum investment limit, but plenty can be opened with just £1.
  • Some accounts have limits on how much you can pay in during a certain period.
  • Once you’ve opened a savings account, you could set up a direct debit for a certain amount every month to help you automatically save.

Whether you’ve got short-term savings goal, long-term plans, want some protection for a rainy day, or help you for life’s unexpected events, savings account interest rates look like they’re on the up.

Base rate Savings account Interest

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