When you have savings, it is likely that you will always be on the look out to make sure that you have a good interest rate. These vary a lot and you will find that there are big differences between interest rates with different accounts. Also, some will have a fixed interest rate and others will be varied. It is worth considering whether you feel that a fixed might be better than a variable rate and what the advantages and disadvantages of each might be.
Fixed Rate Savings Accounts
Fixed rate savings accounts will hold their interest rate for a specified period of time. They will generally be bonds. But there may be others as well. It is good to look into them carefully though as you may find that the terms are quite restricted. For example, you may have to keep your money in the account for a certain period of time. You may not be able to withdraw it at all or you may only be able to withdraw a certain amount or at certain time or a certain number of times. It sounds a bit complex but this is because the rules may vary depending on the particular bank or building society that you use. If you do make withdrawals you may find that there is some sort of penalty. Often there is a bonus with these sorts of accounts, added to the interest and you could lose this.
It is also wise to look carefully into the interest rate itself. The rate will be fixed, which means that it cannot go down for the period stated. This can be especially good if you want to make sure that you are protected form rates falling and if you predict that this might happen during the time that your money will be in the account. Of course, it is not easy to predict this but you may have a few ideas. If you think the rate is going to rise, then it could be better to be in a variable rate as then you may find that you are paid more interest. However, it all depends on how good the fixed rate percentage actually is compared to other rates that are available. If it is significantly better then it might be worth going with anyway.
Variable Rate Savings Accounts
You will find that there is more of a variety of variable rate accounts and many of them are instant access. This means that you will be able to draw your money out of the account at any time. This can be very useful if you need money in an emergency. However, it often means that the interest rate will be lower. So, you will need to decide whether you feel it is worth it. Of course, if you compare rates often, then you will find that you can check and see whether your rates are competitive or whether you would be better off moving your money to somewhere that pays out a lot more. You will find though, that if the Bank of England reduce the base rates, then it is highly likely that your variable rate will go down. Therefore having a fixed rate will protect your from this.
It can be a tricky decision as you need in some ways to be able to predict what the rates will do in the future. If you tie yourself into a fixed rate and then rates go up you may miss out on that increase in rate. However, if you do not tie yourself in and rates go down, you could lose out on interest as a result of this.