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High Interest Savings
If money canít grow on trees, it is at least desirable to have money grow while in the bank. There are a number of accounts which offer higher than average interest rates. The information below was correct in September 2009; it may be out of date by now so it should be viewed as a guide only.
A Regular Savers account can earn up to five percent AER. This account allows deposits of between £250 and £500 each month.
Fixed Rate Accounts pay up to 4.60 percent interest on a minimum deposit of £1,000. These accounts have terms ranging from 6 to 48 months, during which period the funds cannot be withdrawn. That means the depositor needs to be certain that the funds will not be needed in the immediate future. The interest remains fixed during the duration of the term. No additional deposits may be made into the account after the initial amount, but the funds may be rolled over into a new account at the end of the term.
Easy Access accounts combine high interest with the ability to withdraw money on short notice. The interest paid can vary from 3.25% percent to 0.75, so itís a good idea to shop around for the best easy access account. A major drawback to these types of accounts is that the cost of withdrawal can be very severe. Some banks impose a high penalty on early withdrawal.
Ethical Investment accounts are new on the market and are becoming very popular. These investments provide capital to such industries as farming, alternative energy, eco-housing, etc. Because some of these causes have become fashionable with many people who wish to support them, the rate of return on these accounts have been excellent. Ethical funds have readily outperformed funds without ďethicalĒ considerations.
High interest bonds with terms ranging from three months to five years earn interest up to 3.50 percent AER. The deposit can range from a minimum of £2,000 to a maximum of £49,999. There are, however, no limits to how many bonds a person can have. There is a penalty of 90 daysí gross interest for early closure of the account.
Direct ISA accounts offer interest rates at least .55 percent above base rate. Customers can deposit a maximum of £2,000 each tax year. The account can be accessed easily online or by telephone. There is no tax on the interest.
Anyone who works hard for his or her money undoubtedly appreciates the best possible return on an investment.