Rainy day ac­counts can be a sav­ing grace

Will Davies, head of sav­ings at Kent Re­liance, reck­ons an easy ac­cess ac­count is ideal if you need to dip into your sav­ings

Kent Messenger Maidstone - West Kent Property - - BEAUTIFULHOMES -

Hav­ing a cash cush­ion is al­ways a good idea. I like the idea part of my sav­ings is read­ily avail­able in case of emer­gen­cies.

It’s an idea in­stilled in me by my par­ents from an early age, and prob­a­bly why I re­fer to it as the “rainy day” sav­ings fund.

My stan­dard rule is to main­tain an ac­count with enough funds to cover an emer­gency (those rainy days also seem to bring with them car trou­bles or a leak­ing wash­ing ma­chine), should I need it.

But while it re­mains un­touched, I also want my sav­ings pot to earn some in­ter­est.

There is, of course, a cer­tain type of sav­ings prod­uct that can help meet this re­quire­ment.

These are called, rather imag­i­na­tively, easy ac­cess ac­counts. Some­times known as no-no­tice or in­stant ac­cess ac­counts, the key fea­ture of this type of ac­count is their flex­i­bil­ity.

They al­low you to make with­drawals at any time, with­out hav­ing to let your provider know in ad­vance. De­posits can be made by cash (usu­ally only avail­able in a branch), cheque or bank trans­fer (BACS pay­ment).

Set­ting up a di­rect debit from your cur­rent ac­count into an easy ac­cess ac­count is a great way to start get­ting into the habit of build­ing up your sav­ings, es­pe­cially if you’re new to sav­ing.

There are var­i­ous dif­fer­ent ways in how you can man­age and op­er­ate your easy ac­cess ac­count.

Online-only ac­counts tend to pay a higher in­ter­est but it’s still worth con­sid­er­ing ac­counts which can be op­er­ated by post, phone and in branches too, though it al­ways pays to have a branch close to you.

There are easy ac­cess ac­counts that will com­bine all these types of ac­cess giv­ing you in­creased flex­i­bil­ity in how you man­age your ac­count.

Many easy ac­cess ac­counts pay in­ter­est an­nu­ally, although some of­fer savers the op­tion to re­ceive in­ter­est monthly which can be use­ful if you’re look­ing to sup­ple­ment your in­come.

Check the an­nual equiv­a­lent rate (AER) to see how much you’ll earn.

This shows you what the rate of in­ter­est is, tak­ing into the ef­fects of com­pound­ing. Com­pound­ing hap­pens when the in­ter­est you’ve earned on your sav­ings it­self earns in­ter­est.

Easy ac­cess ac­counts are straight­for­ward in so far as you can get your hands on your money when­ever you need to, but, as al­ways, look at the small print.

Make sure you check if there is a limit on the num­ber of with­drawals you can make each year and what the min­i­mum bal­ance in your ac­count needs to be. Fall be­low this and your in­ter­est rate will drop, or your ac­count could even be closed.

There may also be a min­i­mum or max­i­mum amount you can with­draw at any one time.

For de­tails call 0845 122 0022 Fi­nan­cial fact: The £20 note is the most com­mon value of ban­knote that the Bank of Eng­land has in cir­cu­la­tion. Some 1.9 bil­lion £20 notes were in cir­cu­la­tion at the end of Fe­bru­ary.

Pound­land have now be­gun selling online

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