September budgeting tips

Now that Summer is over, September can be a great time to reset and get your finances back on track! We all know how expensive Summer can be, and for some of us, we may have been guilty of dipping into our savings pots (me included!). With only three months left of the year, some of us may need to rebuild our emergency fund, or continue on our money saving journey to achieve our financial goals.

Whether you’re looking to save for a big purchase, a rainy day, or build on your current savings, choosing the right savings account is crucial. In the UK, there are different types of savings accounts; and with so many options available, choosing the right savings account can be pretty daunting. Because of this, I am here to break down the different types of savings accounts and how you can find the right one for you!

When it comes to choosing your new savings account it’s important to:

• Identify your savings goals: Are you saving for a short-term or long-term goal? And do you need instant access to your money? If you think you’ll need to dip into your savings regularly, a flexible account is essential. If you have longer term goals, you might be able to lock your money for longer to gain a higher interest rate.
• Understand the different types of savings accounts: There are a few different types of savings accounts, so make sure you have a thorough understanding how each of them work! The three main types of savings accounts are:

Easy Access savings accounts: These savings accounts are exactly what they say on the tin. These accounts allow you the ability to save as little, or as much as you would like whilst having immediate access to your funds. These accounts are great if you are looking to build an easily accessible emergency fund. When it comes to easy access savings accounts, the interest rates tend to be a little lower than other savings products, so it’s important to bear that in mind. Some accounts also have restrictions, so read the T&Cs before you get started.

Fixed Rate Bonds: These savings accounts allow you to earn a set interest rate for a fixed period of time, usually between 1-5 years. It’s important to note that with these accounts, you cannot access your money during this time without incurring a penalty. Despite this, fixed rate bonds, tend to offer higher interest rates in return for locking your money away. These accounts are often more suitable for those who do not need to access their savings for a certain period of time. If you are guilty of finding yourself often dipping into your savings, these accounts can also help you become a more disciplined saver too! According to Hodge, the majority of savers tend to use fixed rate bonds for emergency funds, as well as retirement.

Cash ISAs: Cash ISAs allow you to save up to £20,000 tax-free every year. This means that any interest you earn on your savings will not be subject to tax, making it a very popular option for many savers. When it comes to Cash ISAs, they can either be Easy Access or Fixed Rate so make sure you’re aware of the type of Cash ISA you would like to open up. Hodge for example, offer fixed rate Cash ISAs from 1-5 years. According to Hodge, 58% of their savers use this type of account to build their emergency funds – will you be following suit?

• Compare interest rates and fees: Once you’ve decided which type of account you would like to go for, compare the interest rates offered by different banks or building societies. The rates offered have a significant impact on how much your savings can earn over time, so look out for high-interest rates to help further boost your savings. check for any hidden fees, restrictions, minimum balance requirements, or penalties for early withdrawals.

Hopefully all of the information shared in this article will help you on your hunt for a new savings account. If, you’re on the lookout for a new cash ISA, or fixed rate bond, Hodge have a wide range of savings accounts currently on offer! To explore their different savings products, click here.