Last Updated on 25 October 2021 by Dan
Hello everyone, I hope you’ve had a wonderful Christmas and New Year! Today we’re going to be looking at a few nice and easy things you can do to make sure you’re getting the absolute best of your bank account and ensuring you’re getting the maximum amount of interest – although it’s slim pickings out there.
We’ll start by looking at if you’ve got the best basic bank account, then some additional things we can do to take your savings further.
How to identify the rate of interest on your bank account
It’s important to have a good basic easy-access account with some cash in for life’s emergencies – but also important you get the most you can out it!
You’ll want to take a look at the AER – this is the interest payable on the account. Let’s say this is 1% – this means that if you consistently had £1,000 in your account over the year, you’ll get 1% extra and would have £1,010 next year.
So we want to maximise this, but there’s a few things we need to consider:
What’s the service and reputation of the bank?
Poor service can be frustrating and offset any gains. Banks are required to publish customer satisfaction tables twice a year, and you can read the latest opinions of the public via pollsters IPSOS-MORI here.
How long does the interest rate on your bank account last for?
Banks are particularly notorious for having a great “entry rate” where an account pays high interest but only for a 1 year period. These can be good and you should take advantage, but always check in what the ongoing rate after is. Another limitation is that the high interest rate is usually only valid on a certain amount of money – so check this as well.
Are there any signup rewards for the bank account?
In what’s a competitive market for your accounts, some banks will literally pay you to join them – although this usually requires you to pay in your salary to them. Obviously this shouldn’t be your only determination in choosing, but it’s not a bad one.
Happy with an internet bank, or want a bricks and mortar?
Some of the challenges banks getting good reviews don’t have branches and operate as online only entities. If you’re happy with online only it expands your choices quite a bit so give this some thought.
In terms of some of the best interest paying deals, here’s an selection of good accounts out there now to compare to your own (remember, always do your own research too!)
Finally be aware that banks can change their rates at any time, so you always need to review if you’re still getting the best deal.
If you’re thinking Nationwide might be the best option for you, please use the Contact Us form to let the Wilderness know – a referral will get you an extra £100!
And if you think a challenger bank may be right for you, check out the Monzo vs Starling comparison review at MeMoreMoney!
Higher Interest Bank Account Types
Once we have the basics sorted, it’s worth taking a look to see what additional accounts your bank offers to your current account. There’s a few things worth looking for:
Loyalty Bank Account
Some banks offer loyalty accounts which pay higher levels of interest the longer you’ve been with the bank – Nationwide Loyalty Saver is a good example of this. You need to check terms and conditions, but I’ve found these are generally instant access so a no-brainer to put most of your funds into the higher-earning account.
Term Bank Accounts:
These require a little more consideration. These are accounts where you get paid a higher rate of interest for locking in your savings for a set period – usually a year or two years. You usually can pull your money out if needed in an emergency (check the T and C’s) but lose the interest if you do.
A variant on this is limited access (usually a restriction along the lines of that you can withdraw from the account 3 times during the year, and forgo the interest if you go over this).
Regular Saver Bank Account:
These are accounts where by paying in a certain amount each money you benefit from a higher interest rate – usually these are limited in what you can pay in but the rates can be very beneficial. (An example will be that you’ll be paid 5% AER when paying in £250 a month).
These are all low risk options – whilst unlikely to make a fortune out of these, some easy research and adjustments will provide some very simply extra cash. It’s worth immediately looking at if you bank has a loyalty account, as this can save you quite a bit extra, but be very simple to do.
Is switching your bank account easy?
In a nutshell, yes.
Most people don’t switch owing to nervousness around things going wrong, but new rules introduced in the last couple of years have made switching accounts very easily, with recurring direct debits automatically transferring and the process now happen quickly.
Remember you may need to update telling your employer where to send your salary though!
There’s a lot of variable factors in bank accounts, so if you have any questions, please do just ask us in our comments section below!
And that’s it!
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