Savings with Bonus

Category: Savings

Unconditional bonuses are something that have received a lot of bad coverage but can suit certain savers.

This means an account has a bonus rate of interest of, say, an extra 1% for a certain period of time. After this the interest rate on the account drops, which can mean it is not a market-leading rate.

However, if you are willing to shop around and keep reviewing the interest rates available, accounts with these bonus rates can be beneficial.

• These accounts may be notice, no notice or monthly income accounts.
• No notice accounts do not require you to give any notice to withdraw funds without penalty, such as loss of interest.
• Notice accounts require notice to be given to withdraw funds to avoid any penalty, such as loss of interest. The amount of notice that needs to be given depends on which account you choose.
• Monthly income accounts may be notice or no notice accounts. They pay interest monthly, rather than annually or on account maturity. These may suit you if you are looking for regular income from interest payments.
• Some accounts may offer facilities such as a cash card.

Things to watch out for:

• Minimum balances– with some savings accounts there is a minimum amount you have to put in to open the account.
• Withdrawals– although you may not have to give notice to withdraw your cash, some savings accounts include conditional bonuses in their rates of interest. These often relate to the number of withdrawals that are made over a certain time period. If these are exceeded, interest can be lost.
• Unconditional bonuses– some savings accounts include a bonus rate of interest until a certain time. These savings accounts can offer an attractive return at outset, but can reduce considerably once the bonus rate ends. If you choose a savings account with a bonus rate it is worthwhile reviewing the rate once the bonus term ends.
• Rate guarantees– some savings accounts will offer a guarantee on the rate of interest you receive, despite being a variable rate account. These often relate to the Bank of England base rate. Some rate guarantees have the same effect as a bonus.
• Conditional bonuses– These can include obtaining a higher rate of interest if you hold your current account with that provider, or if you do not make many withdrawals over a certain time period.

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Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.