Help I don't understand about saving accounts!

kattiuxka

HI!

I'm trying to save £3000 for a trip by the end of Feb 2011. I'm thinking of opening a savings account for that but I don't understand how they work, I thought I did but the more I read the more puzzled I get.

I want to open an account mainly for that, therefore I will need to withdraw the £3000 (that is just my aim) by that date- of course I want to keep saving if possible using the same account)

I was looking for a monthly paid interest but what confuses me is that there is the 'fix rate' you get that with unlimited withdraws but what I gather from the explanation here is that a fix rate doesn't allow you to withdraw for that term therefore it has more interest.
Also is the interest calculated per month or year? If so why does it allow you to select a monthly option?

I have £1000 to start with but of course I want to be able to add money monthly or whenever I can, so I can reach my target.

I hope this makes any sense as I think is confusing me even as I try to type.

I would really appreciate if anyone could recommend a savings account that would more or less gives me the flexibility to save for my trip and then carry on if possible. The main interest is to be able to eran a bit extra to help me reach my target, thank you!

alastair_h

Not sure which specific account you are talking about here, but here are a few general guidlines (there may be some differences depending on the terms of the account):-

1. Most fixed rate accounts only allow 1 deposit and the the interest is fixed for that term, 1 year, 2 year etc.
2. During the term most will not allow withdrawals (some may but with loss of interest 30, 60 day etc).
3. Depending on the account there may be monthly or yearly interest rates available.

Take a look at this link, Click on me - and choose a suitable account.

I have found Birmingham Midshires pretty good and use them (and others) for where I want to earn a monthly interest. Click here.

Also have you considered a cash ISA? If you don't use your ISA this would allow you to keep all the interest earned and get a similar rate, click here for best buys.

p00hsticks

THere are all sorts of different savings accounts out there for different situations, so you need to find out that suits your particualr needs. ..

kattiuxka wrote: »

there is the 'fix rate' you get that with unlimited withdraws but what I gather from the explanation here is that a fix rate doesn't allow you to withdraw for that term therefore it has more interest.

Fixed rate accounts usually require you to lock away your money for a certain period of time - usually a year or more, and you can't usually add to it either, so probably not for you at the moment.

kattiuxka wrote: »

Also is the interest calculated per month or year? If so why does it allow you to select a monthly option?

Nearly all savings accounts actually calculate interest daily, but they will pay it into your account either monthly or yearly, and some will give you the choice.

If you are to earn any interest on your money before you go (and it's not going to be much in two months) then you need an account that gives you instant access to your money, lets you add in more at will and pays interest monthly.

kattiuxka

Thank you for the replies...

So I guess a variable rate savings account would be what I\m looking for at the moment, so I can withdrawal the money when I need to take the trip.

Have you got any suggestions? Any that actually work? I had premium bonds but it seem to just be there and I never won anything (but when I was persuaded to get one from one of the bank clerks it sounded great, but of course they need to make it sound like that, so I'm scared that I'll get into something that will sound as good but have the same result...

Lokolo_2

A good variable rate savings account is offered by the post office. Follow the link here to it. This pays 2.9% AER and you can take your money out or add more at any time. Have a look at the specific details to see if the account would suit you.

Its better to apply quick though as you only have the best of 2 months left until you say you need to take the money out so you will want to get as much interest as you can, right? :j

jennifernil

You could go for the Halifax Direct ISA, it is paying 2.8% at the moment. Up till 5th April you can deposit up to £5100 into it, and withdraw without penalty. Just keep £1 in it to keep it open.

Next Tax Year you could add to it, up to the new ISA limit.

Interest is yearly.

A good ordinary (non ISA) account is the Tesco one. I think it is possibly 2.75 at present. But it can take a while to open. The Halifax one you can do instantly on-line.