Savings have made a significant comeback recently. After many years of low interest rates, there’s been an upward shift in the rates offered to savers in the past few months. I know that many of my clients have cash reserves that aren’t necessarily bringing the best returns in, so here are my thoughts on how to make your savings work harder.
Inflation is still high, so in real terms, the value of your money in savings is shrinking. So, it’s especially important to maximise savings interest and mitigate the impact of rising prices. (See earlier posts on this).
What I’m not going to do here is recommend specific savings plans. I’m not a live feed news outlet and whatever’s best right now, probably won’t be tomorrow. However, one thing I will do is encourage you to shop around. Do your research and don’t be afraid to switch banks to get the best rates.
Here’s how you can empower your savings by seeking out the most favourable interest rates available.
Research is Key: Compare Savings Accounts
When it comes to finding the best interest rates, thorough research is your greatest ally. Explore various banks and financial institutions in the UK to compare their savings account options. Look beyond the surface – scrutinise interest rates, terms, and any additional benefits offered. Online tools and comparison websites tailored to the UK market can be invaluable in your quest to pinpoint the most lucrative savings account. I’ve listed several at the foot of the post, but it’s by no means an exhaustive list.
Why UK banks and building societies? That’s easy. If your bank is fully UK-regulated, it means you get £85,000 per person protection in the event it goes bust (£170,000 for joint accounts). Do watch out for some banks being linked to others, meaning this protection is shared, of course.
Consider ISAs: Tax-Efficient Savings
As interest on savings is paid tax-free, you need to be aware of tax rates if you have significant savings. At the time of writing, basic rate taxpayers can earn up to £1,000 in interest tax-free. So, even at 5% interest, you’d need £20,000 saved to earn that. Check with HMRC for current tax rates for your circumstances. Needless to say, it’s never simple with tax rates.
That said, there is another way to save. Individual Savings Accounts (ISAs) in the UK are a great way to save without worrying about taxes eating into your earnings. There are different types of ISAs catering to various financial goals, such as Cash ISAs and Stocks and Shares ISAs. Investigate which type aligns best with your objectives as well as the most competitive interest rates.
Again, shop around for the best savings rates, use the comparison sites below for up-to-date information.
Stay Informed: Monitor Market Trends
Interest rates in the UK can and do fluctuate, based on market conditions and economic factors. Stay informed about the current economic climate and monitor trends in interest rates. Financial news sources specific to the UK can provide insights into upcoming changes in interest rates, helping you time your savings investments for maximum benefit.
For example, some savings rates are only accessible to current account holders in certain banks.
Some banks have been offering up to £200 to switch your current account to them, and then offering up to 8% interest to regular savers. Check the rules for each offer, then work the system!
Review Regularly: Maximise Your Earnings
Once you’ve chosen a savings account with a favourable interest rate, your work doesn’t end there. Periodically review your account and be aware of changes in interest rates offered by your bank. If you find a better rate elsewhere, don’t hesitate to switch all or part of your current account business to access these.
The Current Account Switch Service (CASS) makes this easy and rapid, 7 days, in fact. And it’s free to use.
Regularly assessing your savings ensures you always earn the most from your hard-earned money.
Conclusion: Your Path to Prosperity
In the realm of personal finance, finding the best interest rates is akin to planting seeds for a secure financial future. By investing time in research, considering tax-efficient options like ISAs, staying updated with market trends, and reviewing your accounts regularly, you empower your savings to work harder for you. In the UK, where financial opportunities abound, your well-informed decisions can pave the way for lasting prosperity. Start your journey to financial success today by seeking out the best interest rates and watch your savings grow.