Business & Finance Finance

Your Savings - Your Options

Savings accounts come in a number of different shapes and sizes and offer varying degrees of flexibility and high interest returns accordingly.
With so many options, it pays to shop around to make sure that you're receiving the best return for your money; however, you may also find it beneficial to determine the best use for your money before depositing a lump sum in one account.
The best way to do this is to consider what outstanding debt you have and analyse whether you could benefit from repaying some debt, before settling your savings in one or multiple bank accounts.
In the case of high interest debt, typically in the form of credit cards or personal loans, if the amount of interest you repay over the life of your debt is going to be higher than the interest you'll receive by placing your money in savings, then you could benefit from repaying your debt, before settling on a savings account.
If you have a mortgage, you could benefit from considering early repayment or part repayment, before depositing your money in a bank or building society account.
By reducing your overall mortgage, you could see a reduction in your monthly repayments, meaning that in the longer term, you're more at ease to save as you go, at a time that suits you.
If you possess neither a mortgage nor high interest debt, you might benefit from depositing your savings in a Cash ISA.
A Cash ISA offers you a tax free savings option - attractive to many, however, there is a cap on the amount of money you can lodge in an ISA account.
The standard amount you are able to pay into a Cash ISA is £3,600 per year, but this then enables you to save the remainder of your money elsewhere on a higher rate of interest, which could also benefit you, regardless of the tax levied against your account.
Saving regularly is another option; rather than lodge your money in one lump, you could invest it in an appropriate market or product while saving independently on a monthly regular basis, meaning your money remains your own, for when you need it.
By investing your money in a high risk option, such as investment or stakeholder savings accounts, you could also see a much higher return on your money, but the inevitable risk of decline in the value of your assets is worth considering.
If you're keen to invest your money in a way that prevents you from drawing on it, then you might consider a fixed rate savings scheme.
This option allows you to benefit from typically higher rates of fixed interest, but also typically ties your money into an institution for a set period of time, usually 12 months.
If you're keen not to have access to your savings, this could suit you well; however, there are inevitable drawbacks with this option from fluctuating interest rates, which, should they fall, your money remains safe, but should interest rates rise, you will lose out.
If you prefer to have full access to your savings, you could choose an Instant Access Savings Account (IASA), which enables you to reach your money whenever you need it.
This type of savings account will offer reduced functionality and you would not expect to receive a cheque book - and in some cases a cash card - like you would in your current account.
If you find yourself with savings that you want to protect, you're in the fortunate position of being able to choose the product and service that suits your needs best.
And with there being so many savings accounts available, it is important that you take your time to choose the right one that will benefit you and your future.
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