As a result of the recent much-publicised credit crunch, UK banks are now seeking to offer better interest rates on their savings accounts in order to attract additional customers and alleviate the loss of income from the falling numbers of mortgage approvals. This is great news for consumers, who can shop around to find more favourable terms on savings accounts than have been available in recent memory both online and offline.
One of the best ways to save money is to open an online savings account. An online savings account, or OSA, is, as the name implies, funded and managed exclusively via the internet, and is characterised by high yields, offering interest rates that far surpass those of traditional savings accounts. The reason for this is obvious – by eliminating paperwork and reducing overheads, banks are able to pass on the savings to the customer. They are offered by traditional clicks-and-mortar banks as well as online-only banks, many of which have become very successful in recent years.
These yields offered by OSAs are often comparable to high interest financial instruments such as stocks and bonds, and at the same time offer the liquidity of a normal savings account and the convenience of being able to manage funds online. Many of these high-interest accounts have no fees, no lock-up period and no minimum balance or deposit. Some OSAs can be linked to existing bank accounts to allow for easy transfer of funds between accounts. Some also offer debit cards for customers to directly access their funds.
Consumers wishing to open an online savings account should do sufficient research to find one to suit their particular needs and budget. Many finance websites allow for comparison between different banks and with the current competitive market for online savings accounts, there is no need to settle for second-best.
In addition to the comparison websites there are several online finance forums able to provide additional information and answers from experts and based on other people’s own user experiences. For example, you might want to know what kind of customer service a particular online bank account provides, how long you have to wait for cheques to clear or if customers with a particular online bank account have experienced difficulties withdrawing funds when needed.
So rather than lamenting the recent events in banking, which has led to a less competitive and favourable market for mortgages, consumers would be wise to research whether opening an online savings account could provide them with significant savings in the near future.
Disclaimer:
This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.
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