It can seem these days that having a savings account could be a waste of time. The interest rates are so low, that many of them pay a very small amount. This means that many people may feel that it is not worth saving money.
Advantages of saving
It is important to realise though, that there are benefits to saving and there are ways that you can make money from your savings even if the rates look very low. Saving can give you peace of mind. Knowing that there is some money there for emergencies can be great. You may also want to save up for things, so that you can afford a holiday, put it towards your retirement or pay off your mortgage, for example. Some people just like to save money without having a specific savings goal so that they can use it in case they lose their job or something like that.
Types of Savings Accounts
Some types of savings accounts pay more in interest than others and if you want to make more money from your savings, then it is worth investigating the different types. Most standard savings accounts give you instant access to your money. This means that you can draw it out whenever you wish and therefore the banks cannot invest it and tie it up and therefore they do not pay you very much money in interest. There are alternative accounts where you may be able to make more though.
There are savings accounts where you can tie your money up. A fixed rate bond, for example will usually give you a period of time, perhaps a number of years, when they will promise to pay you a particular interest rate as long as you keep the money invested. Of course, there is some risk to you because if the base rate goes up in this period, then you may lose out keeping your money in this account compared to switching to another. You can normally remove your money but pay a charge, lose a bonus or lose some interest if you do so and it can sometimes be worth doing this if you can find something significantly better. There are also savings accounts where you have to give notice to make a withdrawal, perhaps a month or so. These are good if you plan your spending well in advance and you can take advantage of the better interest rates.
Another way of saving money is to use an ISA. These accounts do not charge you tax on your interest which means that you get more money from them. It is worth remembering though that in the UK, it Is possible to earn £1000 in interest per year before you are liable to pay tax on it, whatever your income. There may be accounts which have better interest rates than ISAs and if you have not used all of your £1000 allowance, then these could be better.
So typing your money up, opting for a fixed rate or using a notice account are ways that you can make more money from your savings without having to take more risk.