There are many different types of savings accounts and these mind your money with varying degrees of flexibility, usually tied to interest rates on offer.
The most common savings accounts are:
- Savings accounts
- Online savings accounts
- Children’s savings accounts
- Cash management accounts, and
- Term deposits
Traditional savings accounts are still popular but operate under an interest rate layer that starts with a base rate paid. You can then earn a bonus interest rate if you adhere to the conditions attached to these accounts. These conditions often include forfeiting the bonus interest if you make a withdrawal or if you fail to deposit a set amount of money every month.
Traditional savings accounts function as a savings accumulating account so it pays to check out the terms and conditions in order to make your money grow at the fastest possible rate.
Online Savings Accounts
With the popularity on the internet and people embracing online banking, many financial institutions are now offering online savings accounts. As the name suggests, these accounts can only be accessed via the internet.
Online savings accounts usually offer a great rate of interest because they are cost effective for the banks to run.
Most online savings accounts are required to be linked to a transaction account.
Online savings accounts have the least conditions attached and often pay the same interest rates across different balances.
Children’s Savings Accounts
Children’s savings accounts functions like a traditional bonus savings account paying high interest rates comprising mostly of bonus interest rates.
Most of the children’s savings accounts have branch access facilities attached to them allowing the children to have real life banking experience.
Accounts are opened in the name of the children giving them a greater sense of ownership and encourage them to take an interest in money by saving.
Cash Management Accounts
Cash management accounts often function like a ‘cash parker’ for deposit account holders who want the basic transaction facilities as well as a good interest rate. However, interest rates are only competitive at much higher balances.