Having a bank account that pays a decent amount of interest is a great way to make your savings grow. However, if you’re not careful, any interest that you earn on your balance could be wiped out by account charges and other fees. The good news is that if you pay attention, it is possible to watch your money grow without worry.
Watch out For Hidden Fees
Some banks may advertise “no fee” accounts, which supposedly don’t charge any monthly fees and also allow an unlimited amount of regular transactions such as deposits and withdrawals. But you should carefully read the documents that come with your account, as there are invariably some fees that would be charged for certain operations. For example, a bank could charge you a fee when you receive an international wire transfer – and that fee might be much higher than you would expect. Such fees also vary widely these days from one bank to the other.
Be Aware of the Account’s Limitations
Many savings or high-interest current accounts have various conditions that must be met if you want to avoid having to pay any fees. Some accounts may have a requirement that you maintain a minimum balance every month in order to waive the regular monthly fee and other service charges. Many banks give you a certain amount of transactions, like bill payments, debit card purchases and withdrawals that you can perform in a month. If you exceed the number of transactions allowed, you may be charged for each one.
Pay specific attention to any possible withdrawal charges, even if you have an account that allows unlimited cashpoint withdrawals. In most cases, the “unlimited” part only applies to withdrawals made at the bank’s own cashpoints or those in a participating network. Therefore, if you use another bank’s cashpoint, particularly overseas, you may be subject to fees for the withdrawal (both by your bank AND by the cashpoint owner).
Use a Separate Account for Your Savings & Investments
This is perhaps the best way to avoid paying account charges. In addition to a current account, which you can use for current transactions such as paying bills, receiving your pay and making withdrawals at the cashpoint, you can open up a savings account that would be used only for that purpose. The majority of savings accounts do not have any monthly fees attached to them and pay higher interest rates than current accounts. Some banks make it easier for you to save by letting you set up an automatic transfer from your current to your savings account every month. If you are looking to begin making investments, then it would be worth looking into a dedicated investment account such as those offered by AXA Self Investor where you can trade stocks, set up ISAs and invest into managed funds.
If you want to avoid losing money due to account charges, you should carefully look at the documentation given when you open your account to see what these charges are and how they apply. Be aware of any conditions or limitations that apply to your account and consider opening a separate savings account.
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