How can I find the best online savings account?
Published Sun, Dec 16, 2012 Updated Tue, Feb 16, 2021
For the most part, online savings accounts are pretty simple; you want somewhere to put your money where you can earn the best possible interest, so that when you need the money there is more of it.
But as usual, things aren’t as straight forward as you might hope. So here are some tips for finding a good savings account that suits your needs:
Annual percentage rate (APR)
By law, every bank must give their interest rates as APR so that you can compare them. This is simply the percentage interest you will receive over a year. As a rule, the higher the APR the better, all other things being equal.
There are also reward accounts available which actually pay you a certain amount each month/year if you pay in regularly. These accounts are not common but there are a few knocking around; to measure them up you should consider whether you will be able to get the all of the available rewards and what those rewards equate to in terms of interest.
Availability of money
Another important thing to consider is how long you are tying up your money for. Many savings accounts allow instant access, so they are not all that different from current accounts. But the best interest rates are normally available with accounts which tie your money in for some number of months. If you know you won’t need your money then this may be the best way to go, but if you might need it at short notice you should check whether you can get access to it.
Picking the right savings account
Which savings account is right for you depends on how you plan to save. Will you be making regular payments in? Do you just have a lump sum you want to invest? Will you need your money at short notice in an emergency? Once you have answered all of those questions picking an account should be easy.