2013 was another terrible year for savers but hopefully 2014 may offer some respite – perhaps wishful thinking but at the very least, hopefully the number of savings rate cuts will slow down – for both new and existing savers.
Whatever this year brings it’s wise to remain vigilant in order to make the most of your savings. Our tops tips can help;
1. Don’t leave money in an uncompetitive account
It may seem like simple advice but with rates falling heavily for both new and existing savers, now more than ever you could find yourself earning virtually no interest on your savings if you don’t switch regularly. Put simply, if someone handed you an extra £750 per year, would you say no? That’s the simple truth between a poor paying account and one of the best easy access accounts for someone investing £50,000*
2. Current Accounts
2013 was the year that more current accounts became pseudo savings accounts, offering high interest rates. If used correctly, these could help boost the interest on your savings. For example, Santander offers up to 3% AER on balances of between £3,000 and £20,000 on its 123 account. But there is a monthly charge on this account, so make sure it still makes sense to switch. Plus it’s worth remembering that applying for a number of current accounts could also affect your credit rating.
3. Why pay tax on your savings if you don’t need to?
With rates so poor every little helps – so don’t forget your cash ISA allowance. Currently you can squirrel away £5,760 into this year’s cash ISA – and the allowance is increasing to £5,940 from 6th April 2014. Some cash ISAs are paying better rates than the equivalent taxable accounts, so not only are they tax free but offer better returns too.
4. And don’t forget your child’s Junior ISA (JISA) or Child Trust Fund (CTF)
The current allowance for the JISA or CTF is £3,720 – and this will be increasing to £3,840 in the new tax year – so don’t forget to consider this if you are saving for your children. For those stuck with CTFs, from 2015 you will finally be able to transfer your CTF into a JISA if you can get a better rate. But whilst you’re waiting, it makes sense to transfer to a better CTF if the rate you are earning is uncompetitive.
5. Don’t miss maturity dates of fixed rate bonds or bonuses
When your fixed rate product matures or your bonus rate ends and you do nothing, often the consequences are dreadful as the rates will plummet. So set a reminder using the SavingsChampion.co.uk Rate Tracker service, then take a look at our best buys and move your money. Also consider offers made by your existing provider; sometimes you will be offered an account not available on the open market, but don’t assume it is a great deal - always check out the competition.
6. Keep an eye on the number of withdrawals you make
Many of the best savings accounts allow a limited number of penalty-free withdrawals, so in order to make sure you earn what you are expecting, don’t fall foul of the rules.
7. It’s NOT all in the name
Don’t be persuaded by alluring names or so called “preferential rates” for existing customers as you can often do better elsewhere. HSBC, for example, offers a Premier Savings account which it claims offers preferential rates for premier current account customers but pays a shocking 0.10%. And the infamous Halifax Liquid Gold account, whilst closed to new savers is paying just 0.05% - nothing gold about it.
8. Mattresses are for sleeping on
While you may feel that the banks and building societies are not a safe place to keep your cash, you do have Financial Services Compensation Scheme protection, so it makes sense to earn as much interest as possible rather than leaving it under the mattress.
9. Not using allowances?
As well as your ISA allowance, there may be other tax allowances waiting to be used or wasted. Does your spouse pay less tax than you? If so, consider putting more savings in their name; then trust them not to spend the money when you’re not looking!
10. Next Christmas is coming…..
If you didn’t save for Christmas this year you’re probably now feeling the uncomfortable effects of overspending on your credit card, and we all know what an unwelcome additional headache that means. So rather than doing the same again, as well as paying off that debt, why not put a little aside each month for next year.
Although we hope that 2014 will bring some better news for savers, it’s still so important to take heed of these top tips as it could make all the difference to how healthy your savings accounts remain.
We offer a range of tools to help savers in their battle against poor paying rates.
Our free Rate Tracker Service monitors all UK based savings accounts, keeping savers informed of any rate changes to their accounts, including bonuses and fixed rate bonds maturing - and lets them know where they could switch to.
And for those with larger savings portfolios, who just don’t have the time to get around to monitoring and switching their savings, for a small fee our Concierge Service can take the hassle from managing a multiple savings account portfolio.
*£50,000 in an account paying 1.60% gross AER would earn £800 per year before tax, whereas it would earn just £50 in an account paying 0.10% gross AER.