Savings accounts
Easier said than done, but just as putting spare pennies in a
jar adds up, so too can putting £1–£2 in an account each week – and
this way you’ll save more money.
As with all banking, there are a number of different
options. If you are think of saving large sums of money, we
recommend speaking to an independent financial advisor. But for the
rest of us, here are our options:
Bank accounts
There are a few types of bank account
for managing everyday money, a basic bank account, a current
account and a savings or ‘term’ account.
You don’t get a chequebook with a basic bank
account and you can’t take out more money than is in the account
(‘go overdrawn’). For this reason basic bank accounts are useful
for anyone worried about overspending.
Savings or ‘term’ accounts usually pay more
interest than current accounts, however current accounts offer
instant access to your money.
Credit union accounts
Credit unions are local not-for-profit
financial co-operatives owned and run by their members, for their
members.
They offer a range of great services that
compete with banks including current and saving accounts, debit
cards and direct debit facilities. They also offer loans from as
little as £100 with affordable interest rates.
Many credit unions charge a small weekly
amount, often as low as only £1 for the use of their current
account, but if you go overdrawn then their charges are a lot less
than banks.
An annual dividend/interest – a bit like a
bonus – is paid to members based on a percentage of their savings,
usually between 1–3%. Many credit unions offer specific savings
clubs, such as those that can only be withdrawn at Christmas, or
junior savers to get kids into the saving habit. They may also
provide incentives such as free life insurance.
Being a credit union member also means you may
get a lower interest rate on any loan that you take out.