We all want to keep a little cash stowed away for a rainy day, and more and more people are opening savings accounts in order to do so. But with the different account options growing day by day, which is the best choice for you?
 

Online Savings Accounts:

With an online savings account you have all of the features that you would expect to have with any standard savings account; for example you can check you balance and transfer money as with any other bank account, however the difference is that you can only deal with your finances using the internet. Unlike with a normal savings account where you can go into your local branch if you want to withdraw cash, with an online savings account you must transfer it into a separate account before you can withdraw it.

Before you sign up to an online saving account it is very important that you understand the difference between “notice” and “no notice” accounts:

“Notice” online savings accounts: If you decide to transfer money from one of these accounts without adhering to the set notice period your bank requires, there is the distinct possibility that you will lose any interest you have gained from the entire month in which you made the transaction. It is crucial that you ensure you are completely familiar with all of the terms and conditions of this type of account, as the set notice period tends to be mentioned in the small print.

“No notice” online savings accounts: The opposite from their “notice” counterparts, these account don’t usually require that you give a period of notice in order to transfer your money without being penalised. Again, however, you should always be familiar with the small print, as terms and conditions differ from bank to bank.

People sometimes refer to online savings accounts as “easy access accounts”, but as we have already mentioned, with this type of banking you are unable to walk into a branch to withdraw your cash, so should not be confused with “instant access accounts”.

Instant access saving accounts on the other hand are one of the most flexible accounts you can get, giving you the option to deposit and withdraw money completely at your discretion. Many of these accounts also have the option of an online banking service, however you also have the option to withdraw money straight from the bank or an ATM without having to transfer it first. Again, be sure to always check your particular bank’s terms and conditions with regards to withdrawing cash, and charging policies.

As you can see, the main different between the account is the way in which you access your money, although online savings accounts tend to offer some of the better interest rates – so before you apply make sure you look carefully at the following things:

• The interest rates
• The likelihood that you may have to withdraw cash on a regular basis
• The policy on withdrawing cash/making transfers from the account and any other terms and conditions contained within the small print.