Savings Accounts FAQs
Q: Why is there a limit to how much I can save in an ISA?
A: The government sets a limit for each individual on how much they can have as tax-free investment and it amounts to £7,200 a year; although only £3,600 of it can be in cash.
Q: If I put money into a long term bond why can’t I get my money back if I want it before the end of the term?
A: Part of the agreement that you make regarding your investment will be that you can’t take the money out, in most cases, before the end of the term. The competitive rate is based on you leaving your money alone, so, even if you find a long term high interest account that will allow you to withdraw early, there will almost certainly be a penalty.
Q: If I open an internet savings account how will I actually take cash out?
A: Most internet accounts allow you to withdraw cash either through your current account or via an ATM.
Q: I know what APR is but what’s AER?
A: AER is the Annual Equivalent Rate of a savings or investment account. Some accounts are offered with a high initial rate which then lowers after a few months so quoting an interest rate alone doesn’t tell the whole story. The AER tells you what that will mean over the course of a year including the effect of compound interest.
Q: Because I’m trying to save as much money possible is there any reason I shouldn't go for a high interest savings account?
A: In a word, access. In general, the higher the rate of interest then the less speedy access to your money you will get. So, if you want instant access to your funds, you won’t get that with most high interest accounts.
Q: Everyone talks about ISAs all the time, are they any good?
A: ISAs have one over-riding advantage and that is the interest is tax free. Whether or not investing in an ISA is right for you will depend on your circumstances and what you want from your savings
Q: My current account gives me interest on my savings, why do I need a savings account?
A: If you want a higher rate of interest compared to what you get on your current account you will need to look for a savings account. If you are keeping a lot of money in your current account you may be missing out. Compare rates and see if there is an account that would suit you better.