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The advantages of monthly savings accounts

Monthly savings accounts are when the bank or financial institution where it is held requires a certain amount to be deposited each month. If you do make the specified deposit or more, you are offered the chance of a higher interest rate. These type of accounts also have other benefits that should be taken in to consideration before applying for the account of your choice.

One of the main advantages of monthly savings accounts is the fact your savings are more likely to grow because you are adding a consistent amount each month. Of course, if you constantly withdraw what you put in this is not always the case but as many banks have withdrawal restrictions on this type of account, the incentive is there to save more than your average savings account.

Monthly savings accounts also have high interest rates, anywhere up to 10% AER for some accounts. However, this is on the understanding that no withdrawals are made on the account. If, in the case of an emergency, you need to make a withdrawal your account may be subject to a penalty fee. These are usually charged at the bank's discretion, with some banks choosing to allow one withdrawal a year without charge or loss of interest.

The HSBC Regular Saver Premier requires customers to deposit at least £25 per month. In return, you can enjoy a healthy 8% AER interest rate. The term for an account is 12-months and you are strictly not allowed to make any withdrawals during this time. One of the best family monthly savings accounts is owned by the Norwich and Peterborough building society. Their interest rate is at 5% AER and you can deposit as little as £1 per month for the period of 12-months. Withdrawals are discouraged, however, they do allow one withdrawal a year with no fee attached.

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