Instant Access Savings Accounts
Instant access savings accounts provide a place for you to store your money, earn some interest on it and also access this cash whenever you wish.
It runs a bit like a current account in that you deposit your money and it is looked after by the provider. However, as it is a savings account, the money will earn interest. This is calculated as a percentage of the money that is sitting in the account. The interest can be paid monthly, quarterly or annually, depending on the provider. Annual interest is usually slightly higher.
Many banks or building societies charge fees or hand out penalties to customers who withdraw cash from their savings accounts. Even if they do allow withdrawals, they might require the customer to provide a notice they wish to do so. Instant access accounts, however, allow savers to take money out whenever they wish, without notice.
Some instant access savings accounts provide banking facilities such as debit cards or cheque books. They usually require only a small sum of money – £1 for example – from the customer to open an account and the maximum amount allowed is usually up in the £2million area, making them highly flexible.
Who are Instant Access Savings Accounts for?
People who require quick and easy access to their savings are the ideal candidates for instant access accounts. The low interest rates mean they are certainly not for high-end investors or people looking to reap huge returns. However, their flexibility make them ideal for anyone who has a little spare cash they wish to save but would like easy access to it.
These accounts could be a good place to put your savings as a short-term measure while you are considering other investment options. They could also provide a safe place to put some cash aside – away from your current account – to pay, for example, for a wedding or home improvements.
Pitfalls of Instant Access Savings Accounts
The interest is usually very low on instant access accounts. When interest rates are low, these accounts tend to have even lower rates. The fact that interest earned is taxed means instant access accounts do not come out as the most lucrative options in the savings world.
Where to find Instant Access Savings Accounts
You will not have to look far to find an instant access savings account. They are extremely common and almost every bank, building society and online bank will have several from which you can choose.
The key is to find one with the best interest rate and which suits your circumstances. There are many accounts available which can be run entirely online, or via the phone or postal system. For people who cannot get easily to a bank these might prove the best option.
Going to a price comparison website could be a helpful way of doing your homework. They will list some of the deals on the market, so you can compare all the details against other products and find the most suitable account.