Changing your savings account is a simple process that can result in an increase in your annual interest of hundreds of pounds. The following is an in-depth walkthrough on how to open the most suitable savings account for your needs.
Changes you can make to your existing savings account
If you want to get the most out of your money, it can be worthwhile to open a savings account that offers a higher interest rate. This will allow your money to grow faster.
The issue is that we are not particularly skilled in performing this activity. Only nine percent of persons surveyed by the Financial Conduct Authority who had moved savings providers in the previous three years were found to have done so, according to research that was carried out in the previous year.
A little less than one quarter of consumers have maintained the same savings account for the entirety of the past decade.
If this describes you, it’s likely that you’re passing up an opportunity to get a better deal.
This comprehensive guide walks you through the process of switching your savings account and provides recommendations for financial institutions that offer competitive interest rates.
1. Determine the kind of account that best suits your needs.
There are advantages and disadvantages to each type of savings account; therefore, you will need to do some research and figure out which kind of package is most suitable for your needs.
Accounts with a set interest rate
Beneficial for: increased rates of savings
Anyone who requires access to their money before the end of the term will be in a bad position since it will either be impossible to withdraw their money or it will come with some form of penalty that will mean they will miss out on interest.
Beneficial for individuals who are able to set aside money on a regular basis Unfavorable for people who do not have or do not wish to have a linked current account, which is a requirement of many providers.
Take note of the accounts
Beneficial for individuals who are able to budget their expenditures up to one hundred and twenty days in advance
Anyone who has an urgent need to access their funds should avoid this.
Accounts with instantaneous access
Advantages include being able to get your hands on your money right away.
It will be difficult to achieve an interest rate that is either equal to or higher than the rate of inflation.
2. Find out which savings accounts and cash Isas offer the best rates.
When you have settled on the type of account that best suits your needs, the next step is to investigate the available interest rates and determine how much more money you could generate from your savings.
We update our guides on How to find the best savings account and How to find the best cash Isa each week with the highest rates available across instant-access and fixed-term accounts. However, it may be worthwhile to check comparison sites for a wider view of what other accounts are available in order to get a better idea of what options are out there.
3. Make sure there aren’t any sneaky terms and conditions.
Make sure you are familiar with the rules of the service before signing up for a new account.
The following are examples of common things that could trip you up:
instant-access accounts that have limitations on the number of withdrawals that can be made ‘bonus rates’ that are reduced after a certain amount of time minimum initial deposits that can range from one pound to thousands of pounds, and they are required just to open the account maximum and minimum deposit and withdrawal amounts being unable to deposit or withdraw money for certain terms and conditions.
4. Move your money over to the new account you opened.
After you have established your new account, it is time to move the money over from your previous account to the new one.
There is just one way to transfer an Isa, and that is to fill out a transfer form with your new Isa provider. If you want to move an Isa, you must do so.
You may do this online with a lot of different providers. After you have dispatched the form, your new service provider will get in touch with the one you have been using previously to work out the details of the transition.
The process of transferring ownership should be finished within 15 calendar days. You can learn more about how to move your cash Isa by reading our guide.
If you intend to move an existing savings account to a new financial institution, you will first need to inquire about the possibilities available to you from the present service provider.
There are several service providers that will let you make a direct BACS transfer to your new account. Some institutions demand that you move the funds into a current account before you can use them.
There is also the possibility that your new service provider will be able to set up a Direct Debit from your previous account.
5. Always keep an eye on the interest rate.
You shouldn’t pat yourself on the back too much after switching your savings accounts. If the new savings account comes with a welcome bonus, jot down the date it expires so that you can evaluate whether or not you should move to another provider to ensure that you are still getting a decent bargain.
Your current service provider may reassure you in a letter by saying something to the effect of “you don’t need to do anything,” but if you continue to use their services, you may be passing up opportunities to earn interest on your money.
If your account has a variable interest rate, you should monitor it regularly to ensure that it remains competitive.