Three Types Of Savings Product

By Author: Bonny Kominek
Total Articles: 32
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If you''re saving money, then it shows you''ve got your finances in order. Saving is the best way to combat financial difficulties should they arise, while you might also be able to afford that extra special purchase such as a car or holiday if you don''t run into any problems.

Not everyone gets all they can out of the money they''ve saved. In fact, a lot of people lose out on a huge amount of interest payments through not having the account that''s right for them. If you''re looking to get the most out of your money, then you need to consider which type of product is best for you.

Savings Accounts

Standard savings accounts are easy to set up and maintain, but they''re not always the best option for saving. Sure, you can pay money into one whenever you like, but sometimes you won''t be able to withdraw without an interest penalty.

You should be aware that interest rates on savings accounts aren''t great at the moment, and you will be taxed on any interest you accrue. If you''re searching for savings with good interest rates connected to a current account, then take a look at Alliance and Leicester.

ISAs

ISAs ...
... are ''independent'' savings accounts, which are tax free. That means if they are offered at the same rate of interest as a bog standard savings account, then you''ll get a better return on your interest, because it won''t be taxed.

You can only save ?3,600 worth of cash per tax year in an ISA, while you can also invest up to the upper limit of ?7,200 in shares. If you''re not going to be saving more than ?3,600 in cash during any year, then an ISA is the best option, but you should really use up your allowance before opening a savings account.

Fixed Rate Bonds

Fixed rate bonds often confuse people, but fundamentally they can be considered as a ''fixed term'' savings account. You put in a lump sum for a set amount of time, and when that period expires you''ll be returned your cash with interest. Rates are often more attractive than ISAs or other savings accounts.

The catch is that you will not be able to withdraw your money for the duration of your term; you will only be able to get it back at the bond''s expiry unless you are prepared to forgo your interest payment. However, if you have a lump sum that you don''t need for a certain length of time, bonds are very attractive options. Bonny Kominek is the author of this article. Alliance