A high interest bank account in the UK is a smart way to earn higher returns while also making sure that your funds remain accessible at all times. If you are planning to open one such account, the points mentioned in this post can help you pick the best.
A regular savings account is where most people in the UK park their idle funds. This ensures that they can access the funds anytime they like while also earning decent interest on the maintained balance. To help the customers earn higher returns, some of the banks in the UK now offer high-interest accounts.
Designed to inculcate a habit of saving, these accounts help you earn higher interest with zero penalties on withdrawals. Here are some of the most important points that you should check before opening a high-interest account.
1 Interest Rate
The interest rate or AER (Annual Equivalent Rate) is one of the most important considerations. Some of the Indian banks in the UK offer AER of as much as 0.50%. These accounts are mostly focused on NRIs working in the UK and generally come with several additional NRI banking facilities.
Prefer one such reliable bank that offers competitive AER and also has an excellent reputation among NRIs in the UK.
2 Interest Payout Frequency
Most of the banks offering such high-interest accounts generally pay interest on an annual basis. However, some of them do offer monthly and annual payout options. You can select one as per your requirement.
With monthly payouts, the interest is paid at the end of every month based on your daily closing balance. If you select annual payout, the interest will be paid on 31st March every year.
3 Minimum Deposit Amount
One drawback of such high-interest accounts is that they have a considerably higher minimum deposit requirement as compared to a regular savings account. But you can find Indian banks in the UK that allow you to open a high-interest account with as little as GBP 1.
Prefer such banks for your high-interest account as they help you start saving even with a small amount. Once the account is opened, you can then increase your monthly deposit to this account as your finances improve.
4 Account Opening Process
Even the account opening process should be simple and quick. The eligibility and documentation requirements should be minimal too. Online account opening would be an added advantage as this will eliminate the need for you to visit the bank.
In most cases, you will be required to submit documents like ID proof and address proof for opening a high-interest account. Also, note that you should already have a UK bank account that will be linked to this high interest account for initial and future deposits.
5 Customer Support
In case of any queries with regards to your high-interest savings account, you should be able to easily get in touch with the support team of the bank. The bank should offer customer support through phone and email.
Also, ensure that the bank has a branch close to your location in the UK so that you can easily visit the bank if required.
Earning High Interest on Your Savings
While there are many different types of investment options in the UK, most of them require you to remain invested for a considerable duration. Premature withdrawal could result in steep penalties. But with a high interest account, you can earn decent returns on your savings and also withdraw the funds as and when required.
The points listed in this post will help you pick the right bank so that you can start earning high interest on your idle funds in a safe and convenient manner.