In the internet age, many people with money to save are turning to ‘online only’ savings accounts instead of the traditional high street saving accounts with their bank. But for some, questions still remain around the safety of their money, while others aren’t sure how online only accounts differ to in-branch accounts and most don’t know where to start when looking for the best deal.
Put simply, online savings accounts differ from normal accounts in the ways that you might expect. Firstly, the account is only available online. This means that you won’t be able to walk into a bank and withdraw cash; to get hold of any savings you would have to transfer them to an account with a bank card, cheque book or physical bank sort code. Also, you cannot set up an online savings account in your branch, only online.
Another key difference is the rates. Banks like it when they don’t have to deal with physical things such as branches, staff, cheque books, bank cards and statements as it is much cheaper for them. Quite often, but not always, they pass on a proportion of the savings to you. Because the online accounts are preferential for the banks, it is also in their interest to keep the accounts secure and attractive so you can rest assured that your money is safe.
So where can you find the best online saving account? Currently the top payer is the Re-Give 1 year fixed rate bond which pays 5% interest on a minimum balance of £100. This account is not, however, subject to the FSCS or the FOS which means your money will not be protected if the organisation goes bust.
If you prefer an established bank, then you should check out Clydesdale Bank’s Cash ISA which offers a generous rate of 4.05% which is streets ahead in terms of ISAs. The minimum £1000 deposit might put some off but if you have the money, this is the best place to keep it. If you’re looking for fixed term savings, Halifax have some of the most attractive online saving accounts over a one, two, three or four year period.
To apply for an account, you will need the minimum deposit. Log on to the website of your preferred lender and look for the online saving account links. As part of the process you will be expected to deposit some cash straight from a debit or credit card but the whole procedure should be self-explanatory, straight forward and very quick.