There are a plethora of different accounts on offer from UK banks and building societies, which can make it difficult when choosing a home for your hard earned savings.
To try and help you narrow things down, here are three top features you should compare before filling out that account application form.
1. Interest Rate
It goes without saying that this should be at the top of your list when looking to get a new savings account. The interest rate will determine how much your savings are going to appreciate and should be the starting point for your search.
Banks will state the percentage as the AER (Annual Equivalent Rate). The AER is specifically designed to make it easier to compare interest rates as it offers a truer picture of what you could earn. It does this by assuming you will keep the initial savings amount in the same account for a year and that any interest is added each month to the principal amount. The interest calculation for subsequent months will be based on the principal plus the previous amounts of interest accumulated i.e. compound interest.
The interest rate applied to your account will be one of two types:
A variable interest rate means the bank or building society may alter the percentage during the time your money is sitting in the account. Changes to interest rates don't usually happen that often but may occur if the Bank of England changes the base rate.
A fixed interest rate means the rate will be set in stone for a specific period. This period is determined up front when you open the account and is often one or two years.
One final point is to check how often your interest is actually added to your account. This could be monthly, quarterly or annually. Some accounts give you the option.
2. Withdrawing your money
It's important to check before you open a new savings account and deposit money, the restrictions applied to the account in terms of withdrawing money.
For example, whilst variable rate accounts are generally more flexible when it comes to getting instant access to your money, fixed rate accounts may require you to give a notice period and you may lose the interest rate offer for doing so.
You should also check to see if the account has limits on how often you can make withdrawals. Some accounts for example only allow a certain number of withdrawals per year whilst some fixed rate accounts don't allow you take any money out unless you are closing the account.
3. Account management
Having the ability to manage your savings account in a way that suits you is important. This includes how you make deposits, withdraw funds, get statements and change your personal details.
These days most people prefer the ability to manage their account online. Check to see what facilities are available, such as logging into the bank website or using a specially designed app for your phone or tablet device.
Whilst most accounts have the ability to transfer funds online, other accounts may require you to visit a branch or use telephone banking. Some savings accounts may also offer a debit card / cashcard for convenience.