Getting into the habit of putting a bit of your cash aside regularly could prove to be one of the most prudent financial decisions you ever make. Many people who are in a position to start saving, put it off simply because they’re unaware of how to set up a savings account.
Keep on reading to discover everything you need to know about setting up an account to get your savings started.
Why Should You Save?
Before you start to save, you must be aware of the benefits of saving. Knowing these benefits will help maintain your motivation to save when you want to use your savings-money for other purposes.
For starters, regular savings doesn’t mean that you need to have had a massive increase in your income. You can start saving with small amounts, even just £5 per month saved will get you into a good savings habit.
Regular saving will allow you to build up a nest egg, providing you with a particular security level in times of need or emergency. Having a cash reserve in the form of savings means you might not have to reach for the credit card or get a loan to cover unexpected expenses.
You might decide to save for a specific event or occasion. A holiday, wedding, or education are fantastic milestones to set for your savings goals. Even if your savings goals aren’t quite as epic as one of these events, setting smaller or shorter-term savings goals will keep you motivated.
Setting up a savings account for a child or family member is another good motivation to save. Putting just a small amount away over a long period can give a loved one a significant boost in life when they start fending for themselves.
How Do You Open A Savings Account?
To open a savings account, the first thing that you need to do is decide upon the type of savings account you want. To help you with this, there are online comparison websites that you can use to gauge the suitability of different accounts using metrics such as interest rates, ease of access to your cash, etc. Typically, you will be able to access your money easier with lower interest rates. Higher interest accounts usually lock your savings for a longer term.
When you’ve decided which type of savings account you want, you need to check with the provider about how to open an account. Depending on the account, you may have to visit the bank or building society branch. Other accounts can be opened with a phone call or via an online application.
Completing your savings account application will require you to provide personal data, such as name, address, occupation, and bank account details. The minimum age for opening an adult savings account is eighteen years.
Identification is required to verify the information that you provide to the bank or building society. Your passport or driving licence will provide photographic identification, and a current utility or council tax bill will prove your address. For online applications, you may need to upload these documents or post them to the provider.
When you’ve completed your application, your provider will process it and send you confirmation that your account has been successfully opened, or not. It typically takes a couple of working days to process a new application. If accepted, your bank or building society will send you your new account number.
What Should You Be Aware Of?
Some savings accounts are straightforward to get started, and you can get going by depositing as little as £1.00. Other accounts can be a little bit more complicated.
Some accounts have a minimum deposit amount, and this can be as much as £500. Also, the advertised interest rate that enticed you to opt for a particular account might not be activated until there is a certain amount in your account. For example, until you teach a threshold of £500, you might be at an interest rate of 0.25%, rather than the advertised rate of 1.25%.
Typically, there are no fees involved with opening a savings account. However, there may be fees or charges incurred if you choose a notice account or a fixed-rate bond, and try to withdraw your money before the end of the term.
Summary
No matter how much you can save each month, putting something away for a rainy day is a fantastic habit of getting into at an early stage. Savings accounts are incredibly straightforward financial products and extremely easy to set up.
The type of savings account you choose will depend on the amount of capital you have to save, the interest rate you want to achieve, and the ease of access you need to your money.
Hopefully, this brief article has given you an insight into how to set up a savings account. Better still, if it has made you decide that now is the time to start saving for your future.