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By Sarah Wray Staff Writer
Monday, 12 May 2008
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Best Interest Rates on your Savings
To get the highest interest on your savings:
- Pay off any debts
- Get a Cash ISA and put £3600 into it ASAP.
- Be an instant access savings account tart and hop, skip, jump about the best deals for any remaining money you want to put away
- Investigate fixed rate and guaranteed rate deals
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If you’ve been following the news on this site you will know that interest savings rates are currently higher than ever. With so many good deals around − some with rates of up to 7.01% − savers have everything to gain by seeking out the very best savings rates.
Getting the best interest on your savings matters because interest means that your money is gaining in value.
If you keep £10 under your mattress (please, don’t!) it will be worth less this time next year because of inflation.
If you play your interest cards right, and stash that £10 away wisely, it will gain value.
Get your savings house is order
Before you break a sweat hunting down the best savings accounts make sure you have paid off all your debts except student loans.
The interest on debts will almost always trump any interest you've earned on your savings. This is a situation where, sadly, the bad guy will pretty much always win.
Secondly the best form of savings is a cash ISA.
Make sure that you have used your £3600 allowance up before you start.
ISAs are tax free, high interest and brilliant. Find out more in Lorrie Kelly's Easy-as-pie Guide to Understanding ISAs.
Ready...
Now onto other savings accounts…
Banks change their interest rates regularly, or they may suck customers in with a high interest rate which drops after an introductory period.
As a savvy saver you will need to remain vigilant and be willing to surf the savings waves to keep your money earning more.
Monitor interest rates − if you can get a better deal, move the money!
Steady...
If constantly monitoring savings interest rates sounds like a bit of a pain, there are some more steady options that will still get you more for your money.
Fixed rates: Fixed rates can be the calm in the storm for savers.
When you sign up you know that your money will be at earning a certain level of interest for a set time, so if you get a high rate you’re laughing.
Some of the rates are currently very attractive as cash strapped banks vie for savings customers.
However, if you then see a better rate, you might be swearing because you usually can’t move your money from these accounts for a fixed period (unless you want to wipe out all the interest benefits by paying a big fine to do this – clue for the unsure : you don’t want to do this).
What you gain in security, you lose in flexibility. Ain’t it always the way.
Guaranteed rates: Back to that inflation rate thing again (see above).
If what you really want to know is that you are at the very least not losing any value on your money a guaranteed rate savings account will assure that, come hell or high water, it will at least match the inflation rate.
These accounts are usually tax free (always nice). However, again, the money needs to be left there for a fixed period of time.
Another thing to remember is that if and when inflation drops, it may well drag your savings interest rate with it.
If you had a guaranteed rate account and then saw the Best Deal Ever you might be peeved, but the knowledge that their money will always be earning something without needing constant attention is enough for some.
Save..
To get the highest interest on your savings:
• Pay off debts
• Get an ISA
• Be an instant access savings account tart and hop, skip, jump about the best deals
• Investigate fixed rate and guaranteed rate deals
And in that order!
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