Which savings account?

Kookai_2

Hi

I hope somebody can help... my boyfriend and I want to open a savings account so we can put a bit of money aside each month to save for a holiday later this year.
What should we be looking for?
I've read Martin's guide to savings accounts but I don't really understand the deal with the way interest is paid and some of the accounts offer an annual bonus.
We may only want to save this way for the next 6 months or so. So do we need an account that pays interest monthly?

Thanks v much

OneADay

Whatever account you choose, interest would need to be paid monthly but with rates so low you will not make any huge amount of money.

Instant access account paying upto or around 3% is your best bet. But a lot of these pay interest annually only.

Saying that you might want to consider 6 month bond - again rates are not great.

stator

You don't have to go for a monthly interest account, you could go for an annual interest account but if you empty the account after 6 months you will have to wait another 6 months for your interest.

This is one of the best at the moment:
http://www.ingdirect.co.uk/savings/variable_rate/default.asp

Kookai_2

Thank you - that's really helpful

Reaper

The replies above don't sound right to me. On the whole accounts don't offer a bonus at the end of the year, instead what they mean by a bonus rate is they they pay a higher interest rate over the first year.

Assuming your plan is to open the account for a few months then close it there is no need to choose monthly interest.

At the point you close the account interest is calculated up to that day and paid to you. You do not have to wait until the end of the year and you will not miss out on any interest.

Just check there are no withdrawal restrictions.