MoneySavingExpert.com Feature by Martin Lewis, MoneySavingExpert Savings Masterclass
Far too many people think “savings rates are so low, why bother doing anything?” Yet, while rates are indeed spitworthily low, don’t be complacent. Active, on-the-ball savers can grab up to 6% interest. So I want to give you a rate-boosting masterclass. The aim’s to put every penny where it earns the max interest. Many specialist higher-rate accounts only let you pay in limited amounts for short amounts of time. So if you’ve big savings, you need to fill them up, then snowball on to the next best, and so on.
Don’t overly worry about
safety. All UK-regulated savings (which all the accounts below are) have the full £85,000 per person, per financial institution savings safety protection. Yet that’s not a reason to just put money in and forget about it. Monitor rates every few months and if they drop, ditch and switch.
First, clear expensive debts. The highest guaranteed return for savings comes from clearing expensive debts, starting with the highest rates. If your debts cost more than your savings earn after tax, clear what you can and you’re onto a winner. This applies to mortgages too, unless you’ve early repayment penalties. Though with a mortgage, always have a cash emergency fund in savings before clearing it.
Earn 6% AER in a regular saver, PLUS free £100 The highest rate on the market is a regular savings account, but it’s only available to new or existing
Firstdirect.com current account customers. Though as First Direct’s won every customer service poll I’ve ever done and currently offers £100 to switch to it, that’s still
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an attractive proposition. Its 6% regular saver lets you put up to £300 a month away for a year and the rate’s fixed.
HSBC.co.uk customers get 4% AER on a similar product, while anyone can get the
LeedsBuildingSociety.co.uk regular saver at 3.05% AER. Full info and more best buys at
mse.me/regularsaver
Use current accounts to get 5% AER easy access I always used to say “never store cash in current accounts, as you earn nothing”. While that still holds true in the main, bizarrely, these days a few bank accounts offer super- high interest rates to draw you in. The highest is Nationwide’s FlexDirect (
www.nationwide.
co.uk/flexdirect) at 5% AER, but you only get this rate for a year, and only on balances up to £2,500. The stand-out deal’s Santander 123’s (
www.santander.com) 3% AER on all savings if you’ve £3k-£20k. It has a £2/month fee, but pays up to 3% cashback on bills. Weigh up if you’ll earn more than the fee before switching. With both, you need to properly switch to them. Full info, pros and cons at
mse.me/bankaccounts
Is an Isa nicer? Up to 1.75% AER tax-free A cash Isa’s just a savings account where the taxman doesn’t remove 20% or 40% of your interest. You can put £5,760 in each tax year, and it remains tax-free year after year until you withdraw it. It’s a no-brainer. Don’t think you’re locking the cash away - the top easy access deal is from
postoffice.co.uk at 1.8% AER on £100+, with two penalty-free withdrawals allowed each tax year. This allows you to transfer old Isas into it as well to boost their rates. The rate includes a bonus for 18
To advertise in thewire t. 07720 429 613 e.
the.wire@btinternet.com
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