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By opening a savings account,
you’re committing to save a certain amount of money on a regular basis.
Many people choose to open savings accounts and then add funds
when the money is readily available to them. While this is possible with
a regular savings account, to truly take advantage of the high interest
rates, you have to be saving monthly.
And it’s this security that enables
the savings account provider to offer such good interest rates. They can
budget in to the future knowing that they’ll have your steady stream of
savings to work with. You’ll find yourself rewarded for reliable saving
activities, and possibly penalised quite heavily - through interest
rates as mentioned - if you start messing with your monthly
transactions.
Some banks will offer inflated
interest rates for a short period of time after you’ve signed up. These
can be anywhere from the 7% to 8% region. It’s not unknown for some
banks to offer a whooping 10%! Don’t be jumping on the phone just yet
though, because yes, there is small print. Lots of it.
In order to stop people taking
advantage of the initial bloated rates, monthly caps are installed. £250
is the typical amount that you can expect to be limited to. That’s still
a hefty sum for a lot of people though, so taking advantage of the
initial interest rates can be extremely prosperous.
Once you’ve arranged your regular
savings account, you’ll be expected to pay in the money on a monthly
basis. This can be either manually done or automated through your bank.
Withdrawing money is fairly
simple, although you should be aware that if you’re still under an
introductory bonus offer, it’s likely to mess with your interest
accumulation.
Many people opt to take advantage
of these bonuses and then move their money in to the next account! It’s
a fairly time consuming process and much more hands-on, but with
interest rates so high, you can’t really blame them.
If you feel that you can commit to
an unwavering monthly “payment”, a savings account is an excellent place
to store your money.
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