In a desperate bid to better their returns, savers may be looking to so-called alternative savings vehicles, as rates continue to fall to record lows. Products such as Retail Bonds, Peer to Peer lending and even Christmas saving clubs all appear to offer rates well above ordinary bank or building societies; however savers may find themselves unprotected if the worst happens.
Peer to Peer lending and Retail Bonds, in particular, have been cropping up more and more in recent months, offering tempting interest rates of 6% or higher. But savers need to aware that these products, although very appealing, are not covered by the Financial Services Compensation Scheme. As such, they are only as strong as the companies offering them. Those prepared to lock away their money for up to 10 years - to sacrifice safety and accessibility - could be offered a reward, but is it worth it? Savers need to do their homework before they take the plunge.