What is a High-Interest Savings Account? 5 Things to Know

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One of the simplest ways to grow your savings in UK is opening a high-interest savings bank account. It helps you earn interest on your savings while also providing you with the freedom to access your funds anytime you like. Read this post to know more about what this high-interest bank account is.

What is a High-Interest Savings Account 5 Things to Know

There is no shortage of investment options in the UK. Unfortunately, most of them come with a high level of risk, which most people are not comfortable with.

Then there are also safer fixed-returns investment options that have minimum risk. But these options generally have a fixed tenure before which you are not allowed to withdraw your funds. Premature withdrawal often leads to a penalty.

But how about an investment option that helps you earn decent returns while also providing you with the freedom to access your money anytime you like without any penalty? A high-interest savings bank account makes this possible. Let us have a detailed look at what this account is, how it works, interest rate, and more.

1 What is a High Interest Savings Account?

A high-interest savings bank account is similar to a standard savings account in the UK. It allows you to deposit your savings and withdraw the same as and when you like. You get to earn interest on the balance you maintain in the account, which can either be paid monthly or annually.

The high-interest account will be linked to an existing bank account for deposit and withdrawal of funds. Some banks also offer a regular savings plan where a fixed amount from your linked account will be deposited into the high-interest account every month to grow your savings.

2 What is the Interest Rate Offered by High-Interest Account?

The interest rate can vary between banks. But some banks offer as high as 0.50% AER (Annual Equivalent Rate) on their high-interest accounts. As compared to depositing your savings in a standard bank account, a high-interest account is a smart choice as it helps you earn a higher rate of interest.

You can access your account online, through phone, or by visiting the nearest bank branch just like a standard bank account. There is no limit on the number of deposits and withdrawals you can make in a month.

3 What is the Minimum Balance Required in High-Interest Account?

Most bank accounts offering a higher rate of interest on their savings accounts generally have high minimum balance requirements of £500 or more. For enhanced flexibility in how you manage your funds, it is preferable to go with a bank that has low minimum balance requirements.

You can now find banks in the UK with a minimum balance requirement of only £1 for their high-interest account. Such banks will protect you from the penalty you are required to pay in case if your balance falls below the recommended minimum balance of the bank.

4 Who is Eligible to Open a High-Interest Account?

Any UK resident above the age of 18 is eligible to open a high-interest savings bank account. But note that this account is only available for individuals and not businesses. Also, an individual is only allowed to hold a single high-interest account on their name.

To open the account, you will be required to have an existing bank account, which will be linked to the high-interest account for deposits and withdrawals.

5 How to Open a High-Interest Account?

You can open a single or joint high interest savings account. The account opening process is simple and can be completed online. Alternatively, you can also visit the nearest branch of the bank to open the account.

The account opening process will require you to fill and submit an account opening form. The bank might also ask for documents such as ID proof and address proof. You will also have to provide details of your existing bank account along with a cheque of the amount you’d like to deposit in your new account.

Save More and Grow Your Wealth with High-Interest Bank Account

As you can see, a high-interest bank account is a smart way to grow your savings along with the freedom to access your funds anytime you like. Browse through the banks offering high-interest account facility to know more and select one that best suits your requirements.

It is recommended that you select a reputed bank that offers a high rate of interest, complete deposit and withdrawal flexibility, and has low minimum balance requirements.

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