The savings market is constantly changing, so how can you make sure you always have the best savings rates while ensuring your capital is protected?
Philip Irwin-Brown, Senior Account Manager from the Concierge Team, gives us his top tips.
1. It may sound obvious but shop around. What isn’t obvious is that using best buy tables is unlikely to be the best source of interest rate information if you have a large lump sum. Best buy tables are created for the masses; best for the 98% of people that have less than £85K in savings (source FSCS) but not necessarily best for you. Larger deposits are simply ignored in these tables as only a very small percentage of people qualify for them.
Accounts may also be excluded from best buy tables if they have restrictions regarding age, postcode, whom the applicant currently banks with, or if they can only be opened or accessed in branch. When putting together a savings portfolio, a best buy table can't show you if you have FSCS licence conflicts in the providers you choose and doesn't show you the accounts in-between the best buys selected, all of which is vital information if you want to get the best overall return and keep your savings safe. All these restrictions mean best buy tables are unlikely to be the best path to the best rates for you.
Savings Champion covers the whole of the market; our advice is totally independent although our best buy tables may also exclude some accounts for the reasons above. You are welcome to call us for free on 0800 321 3581 and we can talk you through the best rates available for your circumstances.
2. Decide how flexible you are willing to be about access to your deposits. How much cash do you need to be able to access on an immediate basis? This amount should be deposited into easy access accounts. If you can lock some away for longer in fixed rate bonds and/or notice accounts it could improve the interest you can earn.
3. Take advantage of the free protection offered by the Financial Services Compensation Scheme (FSCS). Should your bank or building society fail, the maximum pay out is £85,000 per person, per FSCS licence. If you have savings of over £100,000 and want full protection this will require extra administration as you may need to open and monitor multiple accounts and switch when fixed rate bonds mature, bonuses end, your provider decides to drop the rate or a better paying account enters the marketplace. However do not let this extra administration put you off as the reward is the peace of mind of knowing your savings are safe.
4. Check for FSCS licence conflicts. When you need to open a new account check there are no clashes with existing accounts. There are over 120 banks and building societies covered by just 90 licences. Feel free to use our tool to do this.
5. Decide if you are happy to use notice accounts and internet only accounts to increase your return. Notice accounts will not normally allow you access to your cash for the notice period, however some will allow you to if you pay them a penalty equal to the interest that would be accrued in the notice period. Internet only accounts can only be operated using the internet while this has many benefits not everyone wishes to use them.
6. Regularly monitor your accounts. How will you know if your bank or building society drops your interest rate? If you are lucky, they may write to you, but for many reasons they may not be obliged to do so and many don’t. To be sure you will need to check with them regularly, if possible on a weekly basis.
7. Regularly monitor the savings market. Even when you have found the best accounts and deposited your money, new accounts enter the marketplace; how will you know if they offer better returns? You need to monitor the market; we provide free rate alerts that can help. Each time you get an alert you should compare any new accounts against the ones you already have and their corresponding FSCS licences to see if the account is suitable. Also you will need to check the account terms and conditions to make sure you are eligible to apply.
8. Maintain a list of all the accounts you hold so that you know where your money is and what interest rate it was paying. This list can also be useful for loved ones in the event of your death.
9. Keep records of all the accounts you have held in any tax year so that you can make sure you submit your tax return correctly.
10. Let us do the hard work for you, use our Managed Savings Service - Concierge. After all, who wouldn’t want a better, more secure return for their savings without the hassle? To find out more simply enquire without obligation and we will review your existing savings account(s) for free.