Finding the best savings account can be tricky at times especially when you have specific financial needs and goals. In this article we will discuss the best savings accounts option to fixed rate bonds for people over 60s.
What is a savings account?
After you turn 60, your topmost priority should be preparing for your retirement. This may include maximising the money saved in your working years with the help of the right savings account.
A savings account offers better interest rates as compared to standard current accounts. As per a report 23% of the UK savings account holders do not check interest rate before they open the account.
In general you get more interest rate in a savings account as compared to a regular bank account. For instance you may be offered a competitive rate on an account wherein you can withdraw penalty free once in a year.
Keep in mind that you can access the cash in any emergency situation but also make sure that the money grows in value. The interest is only taxable beyond a certain threshold.
If your main concern is tax liability then it is best to consider an Individual Saving Account (ISA), that is tax free.
In most ISAs you can save upto £20,000 each year and also use other saving accounts for making saving above that limit.
What are the best savings accounts for over 60s?
Here we will discuss about the best savings account for people over 60s along with their pros and cons:
Instant access accounts
An instant access account allows withdrawals and deposits with no restrictions. The main advantage of these accounts is that you can access some bonuses and benefits if you fulfil the criteria plus never withdraw money and avoid being charged.
The flexibility of instant access savings accounts also means that £20,000 will have a lower rate of interest as compared to limited access accounts.
Limited access accounts
With a limited access account, you get limited withdrawals therefore it is suitable for people who do not require instant access to money.
One main benefit of opening a limited access account is that you get competitive rates meaning you earn more interest than you would in an instant access account.
One disadvantage of this account is the withdrawal fees that applies when you withdraw the money within certain time period.
Regular savings accounts
These savings account pay yearly interest and is suitable for savers who like to save a certain amount every month. This account offers some of the best interest rates around 7.5%.
However some of the regular savings account offers limited withdrawals and require you to make monthly deposits while the introductory interest rate is only for the first year.
Such savings account require notice period before withdrawing the money which is between 30-180 days. Like limited access account, in a notice account you can get the best interest rates.
However most notice account do not allow easy and quick access to cash withdrawal in case of emergencies.
Fixed-rate savings accounts
Also called fixed rate bonds, these accounts are meant for savers who wish to lock in the money for a fixed periods of time.
With several options ranging from 6 months to 5 years and competitive interest rates, these accounts are ideal after retirement.
Like notice and limited access accounts, fixed rate bonds are less accessible and flexibility.
ISAs are tax free accounts setting limit for upto £20,000 each year. These accounts allow minimising the tax burden. There are different types of ISA and they are flexible in nature.
However you will not be able to save more £20,000 combined spread across open ISAs. So if you exceed this amount in a year you will require another savings account.
Finding the savings account for you
There are several factors to be taken into consideration to choose the best savings account for yourself. It is important to go with an option that aligns best with your circumstances and financial goals.
Would you like to access cash in your account frequently or are you hoping to lock away the money for some time while earning more interest?
Ask the below listed questions to choose the best savings account for yourself.
- What restrictions are followed on the account and do they suit you?
- What benefits am i getting from particular account?
- Will i need minimum balance for opening the account?
- Does the bank provide good customer service?
- Are you okay with the notice periods?
- Would you be accessing money frequently?
If you are likely to earn more than a certain amount as savings interest then you will be liable to pay taxes.