Martin's Savers' Masterclass
Stop the savings rip off! You can now earn up to 5% easy access or 4.88% fixed. Check what you get now. Ditch, switch & save!
Owt under 4% and you're letting them rip you off.
Millions of you are allowing banks, and some building societies, to rip you off with paltry interest. The shift in the UK's interest rate prospects means top savings rates have recently increased, with a strong set of deals paying over 4.5%. Yet many savers still leave their money at a paltry average 2%. Stop it! Make 'em pay for your business.
I was spurred to this by a question on my Question Time Podcast this week, from someone on a very low income, unable to work, and wanted to know: 'We have £115,000 in savings and earn £2,300 interest annually... do we have to pay tax on our savings?'
As I explained, I thought that was the wrong question (though I answered "likely not") - the priority is to ask "Why am I earning such little interest?" On that amount, I'd expect it to be nearer £5,000! The solution was a combination of savings accounts, mixing and matching. To help you boost your interest, here are my tips, explanations and, of course, today's best buys...
- Top easy-access savings: Up to 5% but 'variable' rate.
- Top fixed savings: Guaranteed rate up to 4.88% if you lock money away, or 4.6% with some access.
- Specialist rate boosters: 7% on regular monthly savings | 25% boost for first time buyers | 50% boost if on Universal Credit
- How the tax on savings works: and ways to reduce it
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Three 'Don't save without first checking' tips
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- Saving is investing's poorer cousin - should you be investing? The first place to put spare money is always to build up a cash emergency fund of 3-6mths' worth of bills. But for money you won't use for 5+ years, saving isn't usually the winner. It's worth considering putting some of the rest in a broad spread of investments (eg, a global tracker fund that mirrors the performance of a huge range of companies). Do have a read of my new Beginners guide to investing.
- Got costly debt? It's usually best to use spare cash to clear it first. After all, pay off a grand on a credit card at 25% APR rather than save at 5% and you're £200 a year better off. See Should I pay debt with savings?
- Is overpaying your mortgage a better way to save? If your mortgage rate is the same or higher than you earn in savings, check our Mortgage Overpayment Calc to see if it may be worth you overpaying. If it looks likely, read Should I overpay my mortgage? for full pros & cons.
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Not sure what to do with your savings? At least put it in the top easy-access account while you take time to work it out. These accounts let you put money in and withdraw whenever you want, so you get decent interest and the flexibility to move it elsewhere. The key word here is 'top', as not all savings accounts are equal.
All easy-access accounts are variable rate, so what they pay can change - often when the Bank of England base rate moves, but also at a provider's whim. Many suck you in with a high rate, then after a year or so slap that rate down (eg, when an 'intro bonus' ends) while offering new customers a better deal. You'll be notified of rate changes though, so check then - and if it no longer compares well, take your money out and put it elsewhere.
Now on to today's best buys... For the latest updates, use our Top easy-access savings & Top cash ISAs guide. There are lots of different options, so I'll start with a straightforward(ish) one, then build on it.
