1.Switch your savings account using the Which? Savings Booster tool
According to research carried out by Which?, savers are missing out on £12 billion pounds a year by keeping their money in accounts that pay tiny rates of interest. Over 600 accounts available to UK savers currently pay 0.5% or less annual interest and one in four pay just 0.1% – just £1 a year for every £1,000 saved.
But using our unique Savings Booster tool, you can claim your share of the £12 billion that savers are missing by switching to a best rate account. The tool shows you what you are currently earning on your account and can guide you to the best rate savings account to get your money working harder for you.
2. Make full use of your Isa allowance
With a collective tightening of the purse strings, it’s essential that you take advantage of every opportunity to boost your savings. Always use your full cash Isa allowance so that you can avoid paying tax on the interest you earn on your savings.
Remember, you can save up to £5,200 into your cash Isa until April 5th 2010, after which your new Isa allowance will kick in. And the Coalition Government has announced that from April 6th 2010, cash Isa and stocks and shares Isa limits will increase in line with RPI inflation, giving you a much greater capacity to save tax free.
3. Take advantage of the new £85,000 FSCS limits
From 31 December 2010, the UK’s Financial Services Compensation Scheme (FSCS) limit increases from £50,000 to £85,000 per person, per institution. This means that you can save more in one bank with far greater protection and if you have joint savings with a partner or spouse, you have protection up to £170,000.
Remember, if you have savings of this level, do not use the entire limit as you will need to leave an allowance for the interest you will receive on your savings to ensure that all of your money is fully protected.
Also, over the past three years, many financial institutions have merged in the wake of the financial crisis, and will be sharing one banking license from the beginning of 2011. Read our guide to who owns to whom to find out what coverage your bank provides to you and your savings.
4. Beat inflation with NS&I certificates
National Savings & Investments (NS&I) withdrew Index-linked savings certificates from general sale in July 2010 and has yet to announce their reinstatement. However, there is excellent news for customers who already hold these Index-linked NS&I savings certificates – when your current certificates mature you can roll them over into new ones.
The product is designed to beat inflation and pays RPI plus 1%. This is currently 5.7% tax free, easily beating rates available from banks and building societies and with 100% backing from the government.
5. Keep track of your bonus dates
With almost all savings accounts, the great rate you start off with only lasts for the first 12 months then drops to a miserly rate, causing you to miss out on hundreds of pounds in interest.
When you open a new savings account, mark a date in your diary for the following year and make sure you switch so that your savings aren’t languishing in a low rate account. Use our Savings Booster tool to find the best rate savings account.
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