I was recently made redundant and given quite a substantial amount of money – but I'm not sure what to do with it. I want to put at least half of it in an account for the future, but are there any accounts you'd recommend where the funds could grow? Ideally I'd like an account where I can earn a decent rate of interest, but I'd still like to be able to get my money if I need to.
Competition amongst the banks for our money has never been more fierce with rates on many deposit accounts now over 4% AER. The only problem is that to get the really high rates of interest, the banks want us to lock our money away for a year or more. So if you're up for a bit of a commitment, you can earn 3.8% from Bank of Ireland, 3.95% from AIB, 4.1% from Permanent TSB and a whopping 4.25% from EBS. These rates are all for one year terms.
However, the banking crisis has made nervous savers out of many of us, and quick access to our money is becoming more important. The good news is that some banks are recognising this and you can now earn a decent rate from accounts where you can withdraw some or all of your money at any time and without paying any penalty.
Although, you won't get as much as you would by locking your money away, you can still earn a good interest rate with easy access to your money. RaboDirect are offering 2.4% for their Demand account where you can make withdrawals whenever you want, Ulster Bank's Loyalty Saver will pay you 2.85% depending on how much you have on deposit, and Nationwide UK will pay 3% AER on their Easy Access Account where you can make six withdrawals per year.
Choosing a good home for your money is a big decision, so you need to weigh up how important easy access is compared to a higher rate of interest.
Personal Finance Expert Simon Moynihan from www.bonkers.ie, a financial comparison site, is here to answer your money queries. If you've a question you'd like Simon to answer for this column, please contact Woman's Way directly through publisher www.harmonia.ie.