As children, many of us began saving by plugging our pocket money in a piggy bank. It is a very early lesson in money management, but as adults, need to do more than hide their cash under the bed.

But before you start putting your hard earned money in a savings account, you must pay significant debts you may have. This is because the interest rate on loans is generally higher than the maximum interest on savings accounts. Hence, makes financial sense to pay off these debts before starting to save.

The one exception to this rule is the student loan. According to Student Finance blunt: "All loans bear interest that is linked to the inflation rate in line with the Index of Retail Prices. This means that in terms actual amount you will pay broadly the same value as the amount you have borrowed and no profit is made on the loan itself. Interest accrues on your loan until it has been repaid in full. The current interest rate is 2.4%.

If your debt is only a student loan, then it would be better off putting your money in a high interest savings account and pay the loan in small amounts when you have a little extra money.

Due to inflation if money is not invested or placed in an account that is earning more than the current rate inflation, is actually losing money. Therefore, it is essential that you keep your money in an account that offers an interest rate that is above the current inflation rate.

There are a number of factors to consider when choosing a savings account. Want instant access to your money, or are you happy to give weeks or months in advance? Want an account that is accessible online, or if you prefer face to face service with a real person?

The General Council for protective again is to first open what is called an ISA (Individual Savings Account). This is a savings account where you can put a maximum of £ 3000 per year and do not pay tax on interest earned. Like other savings accounts, rates vary from bank to bank, and unless the ISA is a fixed rate account, interest may change over time. Therefore it is a good idea to always check the interest rates every few months.

If you have more than £ 3000 to save, then there are plenty of great interest accounts, including Internet savings accounts, savings bonds and savings accounts instant access available through your local branch, telephone and ATMs.

Because there are so many options for bank and building society worthwhile shop around and check all the various offers and interest rates. Sometimes banks offer high interest rates to attract customers, who then fell after six months or a year, so it can pay to keep an eye on higher interest savings account and move money.

About the Author:

Paul McIndoe is an online, freelance financial journalist. He lives in Edinburgh with his two dogs.

Article Source: ArticlesBase.com – From Piggy Bank to Savings Account: the Benefits of Saving