As well as watching your money grow, seeing your goals come to fruition, or dreams become more achievable, putting aside money can be rewarding in other ways too, with interest.
When you borrow money from a financial institution you will be charged an interest rate set by the lender. In this circumstance, an interest rate is a percentage of the sum of money borrowed and compounded over one year. On the opposite hand, if you deposit money into an account, whether it is your everyday debit account or a savings account, you will earn money from an interest rate because the financial institution uses your money to fund its lending division or invests it to grow their business. The more you deposit, the more interest you earn, and the more you borrow, the more interest you will generally have to pay.
Interest rate consideration
- What is the interest rate?
- Is it an introductory interest rate? If so, when does the introductory period expire and what is the revert interest rate.
- Will you lose interest if you withdraw money and how much?
- What interest rate rewards will you benefit from if you make regular savings deposits?
Fees and charges
Banks attach fees and charges to your account which could affect how much you save. As well as finding a financial institution that offers a great high interest rate, it's also important to consider their fees and charges.
The charges could include monthly account keeping fees, phone, interest banking and branch fees.