Is it time to review your savings account?

Regularly reviewing your savings account is the best way to maximise the potential of your money. Checking the interest rate against other competitive providers, considering if the nature of the access you have suits your current purposes and ultimately if your account still aligns with your savings goals. Since your goals, interest rate and conditions can change over time, you should check if your savings account still suit your needs.

What is the importance of a savings account review?

With managing your immediate budgeting already taking up so much attention, it’s easy for focus on savings to fade into the background. Especially as many people automate their savings process through monthly standing orders. But as time goes on, the things that initially attracted you to your savings account may have shifted with your financial needs. Something as simple as your interest rate changing can act as a perfect motivator for you to review your savings, as finding a competitive rate elsewhere or even shopping around for a different kind of account that better suits your current needs will help make the most of your money. It stands to reason that the more frequently and thoroughly you review your savings, the more your projection potential (your possible future savings figure, benefitted by compound interest) increases.

Start by reviewing the type of account you need

Different accounts can often be defined by the nature of their interest rate and accessibility. Easy access savings accounts have variable interest, meaning the original rate you may have been attracted to when you opened the account could have dropped over time. In contrast, fixed-rate savings accounts protect your interest rate but limit ease of access to your savings. During a savings account review its important to weigh interest against access, deciding what balance of these elements best suits your personal needs.

How might your savings goals effect your needs?

All savings serve different purposes, which in turn effect what kind of account you might need. When conducting a savings account review, ask yourself if your savings are being kept for emergency purposes, such as to cover unforeseeable future expenses, and thus will need easy access for withdrawal. On the other hand, if your savings goals lean towards a long-term future purchase like a house deposit payment several years in the future, then you may want to explore a fixed-term account to ensure you are maximising your interest across that waiting period. You can see how the various potential purposes of your funds help define how you might wish to save them.

Not all savings need to stay in the same place

Since you could have several varied purposes for your savings, you many consider opening more than one account to reflect these different goals. Money you need to be able to withdraw at short notice in emergency circumstances could stay in an easy access savings account, whereas a separate pot of savings directed towards long-term purchasing goals could sit in a fixed-rate account to maximise interest. It’s important to understand which pot of savings is which and be flexible to change should you find that one needs more attention than the other.

Take the time to check how protected your savings are

Subject to the size of the balances in your savings account(s), it’s important you’re checking deposit protection. The FSCS (Financial Services Compensation Scheme) is guaranteed to protect eligible deposits up to a maximum of £120,000 per eligible individual, per authorised firm. Note the importance of ‘eligibility’ and ‘authorisation’ in defining who and via what banks you can benefit from this protection. Sometimes separate banking firms can even be operating under a shared licence, which can limit your benefits. Checking into these details is again paramount for making sure you’re maximising the projection potential of your savings.

A quick savings check-up:

Keep your review simple and focused by asking yourself these questions:

• What is the current interest rate I’m receiving on my savings?
• Has it changed at all since I first opened my account?
• Since I opened my account, how often have I had to access my money?
• If rarely, would I be better served by a fixed-rate account?
• If all my savings are still in one place, would it be worth me opening another account to better serve the various purposes of my funds?
• Are each of my savings pots defined by a simple purpose?
• Do my savings fall under protection limits for my current bank?

Weigh your answers carefully and consider if you need to undertake a simple savings review to maximise the potential of your money.

Frequently asked questions

When should I review my savings account?

When your provider informs you that your rate or terms are due to change, or if a fixed-rate account is coming up on maturity, or if your own personal savings goals shift. These are all good motivators for you to review your savings account.

Should I only look for a higher interest rate?

Finding the right account for you goes deeper than an interest rate, which in itself is often subject to change. Consider the rate in comparison with ease of accessing the funds, rules of withdrawal, any fixed term and balance limits. The purpose of your savings should always come before the interest rate in guiding where you decide to keep your money.

Is it worth opening more than one savings account?

Often people benefit from opening separate accounts subject to the differing goals of their savings. Accounts for emergency funds might be defined by ease of access, whereas long-term savings can sit in fixed-term accounts for longer. Weigh up the real purposes of your savings and consider if you need to open more accounts to address each of those needs best.

What should I do when my fixed savings account matures?

The provider will contact you in advance of the account maturing to detail your options. Check their information carefully and use it decide what you wish to do with your money: Do you want it to move into another fixed rate account, or perhaps for some of it to be withdrawn for you to use on an upcoming planned purchase?

Next steps

If it is time to review your savings, these Kent Reliance pages may help you compare your options:

Compare all savings accounts

Explore Easy Access Savings

View Cash ISAs

View Fixed Rate Bonds

View current interest rates

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