How do I get the Best Interest on my Savings?

When we decide to save money it is often a hard challenge. We might have to work really hard to spend less on other things or to earn more money so that we can have enough spare money to save. However, we often put our precious money into accounts that earn very little interest. This means that it does not gain very much and often the amount the savings increase in value is lower than inflation so the real value of the money decreases. There are ways to improve this situation though.

Compare rates

It is wise to compare the savings rates between different banks. You will find that they can vary quite a bit and this means that you could possibly get a better savings rate by just swapping to a different bank. The rates will change though and you will find that if you research again, perhaps in a years’ time, then it could be different banks that offer the best rates. This happens because they all want to try to be competitive and will keep changing their rates to try to attract in new customers. It may mean that you will need to swap your money about quite regularly to keep the best rate, but that should not ne too difficult to do.

Tie money up

There are accounts which attract higher rates of interest because they tie your money up. This means that you cannot get the money form the account immediately. It could be that you have to give a certain amount of days’ notice before you can withdraw the money or that you have to keep it in an account for a year or number of years. These have advantage sin that the interest rate is higher but you cannot spend the money. Most will allow you to make withdrawals quickly, but you will lose out on interest or may even have to pay out money in order to do so. They are therefore much more suited for money that you are not keeping to use for an emergency. If you are saving up for the future then they can be good and not being able to easily access the money could actually be an advantage as you will not be able to spend the money that you are saving up.

Pay off loans

It could be better to not save money at all. If you have any loans, you will find that the interest rate on those is most likely to be higher than the money that you are earning on your savings. Check out what you are paying on the loan and what you are receiving on your savings and you will be able to see for yourself. It could be far better to use your savings to repay the loan and then start putting the money that you would have been using to repay the loan into your savings account. You will then build your savings back up and if you continue to do this, you could accumulate quite a big savings pot.

It can be scary using your savings like this. Savings can give us a feeling of security, knowing that we have some money to fall back on if we need it. However, we could always borrow money if we need it in an emergency and if we are careful, this is unlikely to happen anyway. It is much more likely that you will be careful with what you are spending and get the debt paid off and replenish your savings before you need them. It can help if you keep really focussed and motivated on your goal.

Consider investments

Investments have the potential to give a better return than savings. This means that you could consider investing the money. It is wise to understand more about investments first though. This is because there is a risk with an investment that you might lose money. You might find that the investment goes down in value and when you cash it in you get out less than you invested. You can pick your level of risk though. You will find that the investments vary but it tends to be the case that the more risk you are willing to take, the more chance you could get a higher return but also that you could lose some or all of your money. You will therefore need to decide what risk you are willing to take. You need to consider if you can afford to risk losing any money to start with and if you cannot then investments are not for you. However, if you have money that you could do without then investing it could be worthwhile. The level of risk you go for will depend partly on how much you need the money and on how much of a risk taker you personally are.


Should I get an Overdraft?

Many of us will go overdrawn at one time or another. However, it is something that we should really think hard about. An overdraft is a form of loan, which means that we have to pay interest on it. This cost is therefore something that we should justify when we are deciding whether an overdraft is the right idea for us.


The cost of the overdraft is the main disadvantage of using one. The costs will vary between banks though and so you might benefit by comparing them and changing your checking account to one where the overdraft costs are lower. Even if you do not want to do this, it is wise to look at the costs so that you are aware of them. Knowing how much something costs will help to motivate you to pay it off more quickly or to borrow less. Obviously, if you can repay it more quickly you will be charged less interest and therefore the cost of the loan will be less.


It is worth finding out if you are eligible for an overdraft and how much you can borrow. If you have a low credit score you might find that you will not be able to borrow so much money or you may not be able to borrow anything at all. If you cannot get one at all then you will not have to make a decision about whether you should get an overdraft or not. If you can only get a small one it could still be enough for your needs but if you need more then you might have to look for alternatives. It might be possible for you to still use an unauthorised overdraft. These are not arranged with your bank but you just borrow money anyway. These are more expensive than authorised overdrafts and it is best to avoid them as they can be the most expensive way to borrow money.

Credit Score

Having an overdraft will have an impact on your credit score. If you pay it back quickly then the impact will be minimal as it will show that you are capable of repaying debt. However, if you have one for a long time or you keep repaying it and then borrowing again this may have more of a negative impact. If you think you need to be careful of your credit score, perhaps because you want to get another loan or you want to move to a new apartment and a credit check will be needed, then this is something that you need to be careful of.


It is worth being aware of what the alternatives are so that you can make an informed decision. If you have savings or can go without spending the money, then this will be a cheaper option for you. Using savings can be hard when you have spent a lot of time and effort building them up and you like to have them there to fall back on. However, you will be able to replenish those and it will be cheaper to use them and lose the interest you are getting on them than using an overdraft and paying the interest on that, in most cases anyway. It is worth calculating this and then you will be able to make a choice between them. It is also worth thinking about whether you really need the money. If you decide not to spend it then you will not need to borrow or use up your savings.

Another alternative could be a different type of loan. It is worth comparing the cost because an overdraft can be an expensive way to borrow money. You may find that there are other loan types which will still suit your needs but that will be a lot cheaper. It is good to do some research because you could end up saving a significant amount of money.

Is it necessary?

Once you have considered the costs, availability, effect on your credit score and alternatives you will be in a position to decide whether you should get an overdraft. It is worth spending time doing this research as if you rush into getting one then you could regret it. You may wish that you had never had one at all or you might notice that there are better and/or cheaper alternatives that would have suited you much better. If you find the whole thing too confusing then discuss it with someone else. Choose a friend or family member that is good with figures and they should be able to help you with the calculations and comparisons and also with the reasonings as to what option will be best for you. As they are not emotionally involved in the decision, they might be able to find it easier to apply logic.