Aside from giving up alcohol, cigarettes and fatty foods, here are our ten resolutions to ensure your savings work harder in 2012.
Move your savings
Banks and building societies profit from our laziness. Last year’s top ten accounts are unlikely to be best buys this year. If your money is not in a fixed term or bonus paying account, think seriously about switching. It could mean an extra £1,550 per year at current rates on savings of £50,000.
Beat the tax man
Did you know most of us pay one fifth of our savings interest to the tax man? But there’s no point in paying more than you have to. If you have not used your full ISA allowance this year, consider a tax-free cash ISA. The best variable rate ISA pays 3.05%, the best fixed pays 4.50% - no tax due!
Children (unless they are rich) and any others who pay no income tax (including many retirees) can also get savings income tax free. You’ll need a form R85 from HMRC. It’s available here - along with a handy tax calculator. You can claim back any overpaid tax.
Make your wife (or husband) happy
If your spouse doesn’t pay tax, or simply pays less tax than you, put savings in their name and register with the R85 form for tax-free savings. Then trust your partner not to spend the money when you’re not looking.
Be mature about maturity
Fixed rate bonds can be good if they lock in decent rates. But when the party’s over, those rates can drop considerably. Many ‘holding accounts’ - where your money ends up - pay a dismal 0.1%. Sign up for a SavingsChampion.co.uk reminder via the free Rate Tracker service and we’ll tell you when your bond matures and what better rates are on offer.
Take your banker’s bonus
The same applies to bonus accounts that pay you a healthy dollop of interest if you hold your money for a year (or sometimes longer). Once bonus periods are over, interest rates plummet. Again, the banks count on us being lazy. Sign up for Rate Tracker and we’ll remind you to shop around.
Loyalty doesn’t pay
Banks tempt new customers with juicy rates then pull the wool over the eyes of existing savers with ‘preferential rates’. HSBC should be embarrassed by its Premier Savings Account, peddled to its premier current account holders. 0.1% isn’t very premier in our book. In comparison you can currently get 3.12% AER from the Nationwide Building Society and you needn’t switch your current account.
We’re all worried about the state of British banks - but surely they must be safer than Greek ones. And we’ve got the Financial Services Compensation Scheme which pays out £85,000 per saver per banking licence if anything goes wrong. Check out our FSCS guide to make sure your money is adequately covered.
Mind the gimmicks!
Gimmicks and gifts can be a great marketing ploy to entice you in but you need to look at the products as a whole. Halifax recently jumped on the National Savings premium bond idea by offering its own Prize Draw. However unlike the premium bond £1million prize draw, once a month Halifax gives three lucky savers £100,000 each, with smaller prizes available for other savers provided they have at least £5,000 in a qualifying account. And it’s no surprise that these qualifying accounts don’t pay the most competitive rates available.
Prepare for Christmas 2012
Yep, Sue’s already planning next year’s festivities. Instead of loading up your credit card buying presents, how about a little forethought? Why not put a little aside each month for next year? Check our tables for the best regular savings accounts, which traditionally pay some of the best rates on the market, so you can build up a nice lump sum.
So? We’re repeating ourselves but we’re worth it. Sign up for our free Rate Tracker service and we’ll tell you when your rates drop or when better ones appear. And tell all your friends about it. Like all the best things in life, our service is absolutely free.