5 Top Tips for Saving in 2015
You can get up to 5% using High Interest Paying Current Accounts
1) High Interest Paying Current Accounts are the pseudo savings accounts that offer rates well over and above what’s available on a standard savings account. Although these fantastic rates are only available on lower balances and conditions do apply, they’re one of the best options for savers looking to maximise the interest earned.
Nationwide and TSB both pay up to 5% AER on a maximum balance of £2,500 and £2,000 respectively and you don’t even need to switch your main current account to use them. You must pay in £1,000 per month for Nationwide and £500 per month for TSB to earn the high rate, however by setting up a simple standing order, it's little work for a very competitive rate of interest.
For those with larger balances, Santander pays up to 3% AER on balances of between £3,000 and £20,000. Again there’s no need to switch, however you must deposit £500 a month and set up at least 2 direct debits to be eligible and it does come with a £2 monthly fee (although this can be negated with the cashback on bills).
2) If you’re looking to get into the saving habit, top paying Regular Savings Accounts are a great way to start. Rates of up to 6% are available with First Direct and M&S Bank, although both of these require you to have or open a current account with them. These accounts also restrict the amount you can save, from £25 to a maximum of £300 per month for First Direct and £250 per month with M&S Bank.
3) To fix or not to fix – that is the question. 2015 brings with it the very real prospect of the first move in the Bank of England base rate for almost six years. For some savers the prospect of an increase in the base rate brings with it a decision on how best to take advantage. Do you put your cash into an accessible easy access savings account now, many of which pay less than 1.5%, or do you lock into longer term fixed rates to access rates of over 3% but risk missing out on possible short term rises in rates?
Our approach is one of caution. A rise in the Bank of England base rate doesn’t guarantee the same rise in savings rates, especially now the link between them seems to have been broken, with thousands of existing savings rates being cut, sometimes repeatedly, with no movement in the base rate for almost 6 years. So it could be wise to spread your money between a range of products, from high interest paying current accounts, accessible variable rate accounts as well as fixed rate bonds, to access a mix of some of the best rates available now, with money set aside in accessible accounts should better rates come along.
Fixed rate bonds currently pay up to 3.02% gross AER fixed for 5 years with Vanquis Bank, while you can get 2% gross/AER fixed for just 1 year with the Punjab National Bank.
Top paying easy access accounts pay substantially less at 1.40% gross/AER from the likes of Tesco Bank, Post Office, The AA and Coventry Building Society.
Check out full details of all the best rates here or why not give us a call should you wish to chat through these or any other savings queries you might have.
4) Check and track your savings rates! It goes without saying that the first step to improving your savings rates is checking if you’re getting a good deal in the first place. Providers aren’t always great at keeping savers fully informed of the rate being paid and will never tell you if you could be getting a better deal from another provider. So log on to Rate Tracker and let us do the hard work for you.
And for those looking for a managed savings service whereby we’ll research, open and manage your accounts for you why not contact one of our Concierge savings advisers for a free savings review.
5) Don’t be put off by low interest rates. Getting everyone excited about saving can be challenge enough, however, in the current low interest rate environment many people may think what’s the point?!
Even with rates at record low levels it’s still worth keeping your money on the move and chasing the best rates available. In fact, as rates are low you could say it has never been more important. With savings accounts paying as little as 0.05% on the high street, there's a substantial difference in the interest rates available to savers, especially when compared to the 5% rates on some current accounts, as mentioned above. Don’t play into the banks' hands. Make sure you’re getting the best rates you can on your savings.