High interest savings accounts often have a minimum period you have to lock your cash in for.
When choosing a savings account it is very tempting to be persuaded by headline grabbing interest rates to park your money.
However some high interest rates savings accounts come loaded with temporary interest hikes to lure new customers in and slapped down after a short period of time.
In addition they come with a plethora of restrictions.
What should I look out for when it comes to my high interest savings account?
In order to get the best return on your money it is crucial to consider several factors before choosing a high interest savings account:
Introductory rates or bonuses
These are the temporary rates offered to lure you. Make you are active and switch accounts once this expires.
Access restrictions
Crucial to look at how easy it would be for you to access your money. Easy access or instant access will allow you to get to your money instantly, whereas the fixed rate account will lock your money in for a set period of time.
Withdrawal penalties
Some high interest savings account will limit the number of withdrawals you can make without penalty and some will not pay interest in any month you make a withdrawal.
This can be a costly mistake if you have a large sum saved in that account.
Tax
If you are tax payer then you will be charged tax on the interest you earn.
The only way to avoid this is to invest in a ISA which allows you tax free interest.
Minimum deposits
Some accounts will insist on minimum or maximum deposits, make sure you can meet the requirements.
