There are a few ways that savings can be maximized with both checking accounts and savings account. However, savings accounts usually have a higher rate of interest than checking accounts so can be more suitable. However, whether a checking or savings account the following guidelines will maximize savings.
To begin with, you should consider researching various account options. Investing in high interest accounts is the best way to maximize interest returns, whether a checking or savings account. Although, savings accounts will usually have higher interest rates than checking accounts. The higher the interest rate the better, although some may just offer a big first year bonus before reverting to a much lower interest rate. So, do take note of this also.
In the UK, there are ISA accounts which provide a tax-free savings account alternative. As such, these ISA accounts are also recommended for savings.
Always try and leave the maximum deposit in the particular account. Many savings accounts may have a maximum annual deposit which can be put into the account. The larger the deposit that is included the more interest that will be returned at the end of the year. As such, fill the account as soon as possible, as quickly as possible to get the best possible returns.
In addition to this, a long term savings plan is also recommended. There are a few advantages that a long term savings plan can have. The first is that some accounts many have progressively higher rates of interest in relation to the deposit size. As such, the larger the deposit the higher the interest rate may be.
The next big advantage of a long term savings plan is that of compound interest. Compound interest is interest on top of the interest. For example, if your bank account returns $100 of interest in the first year, then with a two percent interest rate and no additional deposits it will return $102 in the second year. In the very long term, with additional deposits the savings interest can greatly increase with compound interest.
As such, to maximize savings interest it is recommended that large deposits be left in savings account, unless a checking account itself has a particularly high rate of interest. Research saving account rates and compare them with the checking accounts. Then, make sure deposits are maximized and consider a long term savings plan which may give higher interest rates, and will also provide greater compound interest.