Importance of Savings Accounts
A savings account is good for you whether you’re a saver or struggling with a budget. However, the choice can be overwhelming – especially for students!
Most banks offer perks for student savings accounts. But it can be hard to know which will benefit you the most. There are more than just the perks to consider when choosing the right savings account. We offer some top tips for you to follow!
Why do you need a Savings Account?
You don’t exactly need a savings account, but it could be very beneficial. As a student, you could have a part-time job and want to put your wages aside. Or you may like to put a bit of money away each month from your student loan. A savings account is a great way to do so. This way you can split your savings from the money you want to or can spend. Also, if you have a reasonable interest rate on the savings account, you can actually earn free money.
How to earn interest?
It depends on the amount of money you put into your account. It also depends on the time you leave it there. More money for longer durations make you earn more interest.
Types of Savings Accounts
Easy-access savings accounts
The name of this account pretty much describes it. An easy-access savings account means you can access and withdraw your money anytime without any limits. It also means you can put as much or as little money as you like into the account. In this case there is no minimum amount.
Fixed-rate savings accounts
This type of savings account is quite the opposite of an early-access one. Fixed-rate savings account limits when you can withdraw your money.
Current accounts
This doesn’t apply to all current accounts. But some current accounts come with savings accounts as part of their package. The most common and best for students are cash ISAs and lifetime ISAs.
Cash ISAs
ISAs are suitable for long-term savings. You could begin saving while still at university and keep the account after graduation to continue saving. The best bit about ISAs is that all interest on the money in your savings is tax-free. You can deposit a maximum of £20,000 annually, and all interest will be tax-free!