|The standard things matter: return,
risk, liquidity, diversification
Your return is the interest rate. For instant access cash you just
look for the best interest rate you can. This will always be in
an online account. If you want the benefits of a high street branch
and a smiling face to answer your questions you'll have to pay for
it - through lower interest rates.
You can keep switching accounts to find the best rates
if you have the energy and nothing better to do with your time.
Remember that every time you switch your balance will spend a few
days in that strange banking limboland when you get no interest
If you tie your money up for a fixed term you should
expect extra interest for your loss of liquidity. To judge this
you need to understand the yield
Provided you have a balance of less than £35,000 in your account
it is guaranteed by the government (under the UK's deposit insurance
scheme). So if your bank collapses it will cost you nothing but
inconvenience. This will not apply to accounts outside the UK or
deposits with non-banks anywhere.
If you have large amounts in cash spread it between
several banks (diversification).
Make sure you understand any withdrawal restrictions on your account.
Any restraint on your getting at your money is a cost (to you).
If you tie your money up make sure you have properly evaluated the
benefit of hanging
A few other things....
- Donít be seduced (at least, only knowingly
be seduced) by high interest rates that are really introductory
- Today's star can turn into tomorrow's dog.
It's the marketing, stupid.
- Make sure the Deposit Insurance Scheme applies
to your account. Deposits with non-banks are outside the scheme,
as are foreign banks and offshore accounts even with impeccable