As children, many of us began saving by including our pocket money in a piggy bank. This is a good early lesson in money management, but as adults, we need to do more than just hide your money under your bed.
But before you put your hard earned money into a savings account, you should first pay off any significant debts you May have. This is because the interest rate on loans is usually higher than the maximum interest on savings accounts. Therefore, it makes financial sense to pay off these debts before you start to save.
The only exception to this rule is a student loan. According to the Student Finance Direct: "All student loans accrue interest which is linked to the rate of inflation in line with the Retail Prices Index This means that a realistic amount that you pay back will have broadly the same value as the amount that you have. Are borrowed and not profit made on the loan itself. interest accrued on the loan until repaid in full. the current interest rate is 2.4 %".
If your only debt is student loan, then it would be better off financially, by putting their money into high interest savings account and paying off the loan in small amounts, when you have a little spare cash.
Due to inflation, if money is not invested or placed in the account that is earning more than the current inflation rate, you actually lose money. Therefore it is important to save money in an account that offers an interest rate that is above the current rate of inflation.
There are many factors to consider when choosing a savings account. Want to have instant access to your money, or are you happy to give a few weeks or months notice? If you want an account that is available online, or would you prefer to be face to face with a real person?
General advice for new savers is the first open what is called an ISA (individual savings account). This is a savings account in which you can put up to £ 3,000 a year, and you do not charge tax on interest. Like other savings accounts, prices may vary from bank to bank, and if the ISA fixed rate account, interest may change over time. Therefore, it is a good idea to always check the interest rates every few months.
If you have more than £ 3,000 to save, then there are plenty of high-interest accounts, including savings bonds and instant access savings accounts accessible through your local branch, telephone, and ATMs.
As there are so many choices of banks and building societies, it pays to shop around and check out all the different offers and interest rates. Sometimes banks offer high interest rates to attract buyers, which is then reduced after six months or a year, so I can pay to be about the highest interest savings account and move your money around.
