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Savings Accounts Checklist

To help you keep on the ball with how savings accounts sometimes work, we’ve set out some of the main things to watch out for:

Opening restrictions

• Before you decide which account is the best you’ll need to be sure you are eligible to open it. Some products are only available to existing customers or in certain locations (particularly for small regional building societies). You may have to take out other products with the provider at the same time to qualify for the account you want.

Competitive interest rates

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• Keep an eye on your interest rate to make sure it still stacks up. Banks have been guilty in the past of reducing rates for existing savers while attracting new ones with better rates. If your provider subscribes to the Banking Code they will tell you if your interest rate reduces significantly when compared to the Bank of England base rate.

Interest Rate Bonuses

• Many advertised interest rates include an element of bonus. Some will be unconditional bonuses which apply for a certain period of time. Others will be conditional eg on how long you hold the money with the provider, or on the number of withdrawals made.

Withdrawal Penalties

• Make sure you understand whether there are any penalties for withdrawing your money. Penalties are normally in the form of lost interest, and these are normal for notice accounts so it’s good to keep some money in a no-notice account to avoid this problem.

• Some accounts allow a certain number of withdrawals per year before you incur any penalties.

Are your savings protected?

• If you’ve been spooked by recent issues like the run on Northern Rock, you may want to make sure your savings are fully protected by the Deposit Protection Scheme.

• Your deposit-based savings are protected up to £35,000 per bank. Be aware that some banks are just brands operating under the licence of another authorised bank and the £35,000 limit applies to all the brands under that licence. Make sure you spread your savings between different banks to be sure of full protection.

What to do Next

Now you’re aware of all the considerations, take a look at the latest savings accounts best buys to check the latest rates and deals on offer. Moneyfacts.co.uk has also put together a range of savings accounts guides to help you understand the different sorts of accounts available.