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Savings Accounts can generally be categorized into five, there’s the Easy Access on No Notice Account, the Notice Accounts, Bond or Term Accounts, Regular Savings Accounts, and Individual Savings Account or ISA and Tax-Free Accounts. The first type is the Easy Access or No Notice Savings Accounts. This type of account has become highly popular because it allows people to have immediate access of their money. Because you can withdraw your money when you like however, these types of accounts have a lower interest rate than others. Withdrawing from these kinds of accounts can be via a branch, by telephone, or via the internet. However, getting your cash through the phone or net may require a couple days before the check can be sent or the money is transferred to your account. Easy Access Accounts will also require you to check on them every three months to make sure that you’re getting the best return for your savings. The opposite of Easy Access Accounts is the Notice Account. In this type, a required amount of notice would have to be given in order for the applicant to make a withdrawal; if you don’t give this notice you could incur penalties. The amount of notice will depend on which savings accounts you choose. Notice Accounts are becoming less attractive to people since you can’t really get your money whenever you want it. The third category is the Bond or Term Accounts. Bond Accounts are savings accounts that are more often used by people who want their money secure above all. When you open a bond account, you agree to have your money tied up for a period of between one and five years and the applicant is not allowed to withdraw any of their money before the end of the bond. You also cannot add to the bond, although you can take out an additional one. The next category is the Regular Saving Account. Regular Savings Accounts are ones that are best for people who can commit to making regular savings and deposit money on a monthly basis. These accounts will require you to make a minimum number of monthly payments in order to avoid loss of interest or closure. Making all of your monthly payments however, could earn you an an annual bonus as interest on top of your usual interest rate. Some of these accounts limit the how much you can deposit monthly and there may also be a limit to the number of withdrawals made to that account. The last category is the cash Individual Savings Account and the Tax Free Accounts. The returns from these types of accounts are free from income tax and capital gains tax, but the maximum cash investment an applicant can make annually is up to £3,600 or £5,100 if you’re over 50. There is another type of ISA known as a stocks or shares ISA or a maxi ISA where you can invest up to £10,200, however this is the maximum amount allowed across both ISAs. A maxi ISA is not as safe as a cash ISA as your money is invested in the stock market and so its value may go down as well as up. Withdrawals are allowed for ISAs but once the maximum amount has been deposited in any year, no further deposits can be made.
John Hughes is author of this article on Savings Bonds. Find more information about Best Savings Bonds here.
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