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Building your log cabin fund – The best options for savings accounts

A log cabin can be that addition to your garden that allows you to truly appreciate and enjoy the vagaries of the unpredictable British summer – no need to keep cancelling those barbecues!  However, saving up for log cabin may take a little time given the tight finances many are currently experiencing, so it is important to make sure that you are achieving the best growth possible for your money as you build up your log cabin fund.

Investment products can offer the best rates of interest possible through retail banking, but always carry the risk that your fund can diminish, as well as grow.  If you want, quite sensibly, to go the no-risk route, there are several kinds of savings accounts that markedly out-perform the competition – if you know where to look.

Regular savings accounts may sound like the American way of describing standard savings accounts, but are in fact a specific class of savings accounts that can offer the best rates of interest.  Regular savings accounts offer headline rates of interest, usually for a fixed period – this is often around a year.  This interest rate is offered if you are able to meet the condition of minimum regular monthly deposit.  Here a note of caution is perhaps required; if you are unable to make this regular monthly deposit, you will usually earn only minimal interest for that month.  Additionally, the rate of interest after the initial period usually drops down to a low market rate.

However, provided you can make the monthly payments, regular accounts easily outstrip other savings accounts for the initial period.  The big high street banks like Santander, for example, offer a range of regular savings accounts for people in different circumstances, and the relatively short term nature of the deal is well suited to saving up for your log cabin – you don’t want to wait forever, do you?  Once the initial high interest period is over, simply shop around, move the money to a different account, and begin the ‘honeymoon’ period of high interest all over again.

It is always a good idea to incorporate your annual ISA limit into your savings plans.  The interest gained on Cash ISA accounts is tax free when you deposit a sum equal or less than your annual cash ISA allowance.  The tax free nature of this growth means that a seemingly modest rate of interest offered for a cash ISA still achieves better growth than standard savings accounts, the interest on which counts as income – and is therefore taxable.   You’ll easily find the range of cash ISA options available with a quick search online.