For two years savers have been finding little return on their deposit with a base rate sitting at 0.5 per cent. With inflation at 4 per cent and very few accounts paying above inflation level the return is lower than the cost of living increases. Investment in savings has not been what it used to be in the past.
However there are new higher paying individual savings accounts that are being introduced that will bring a bit more to the saver’s investment and the odds are increasing that there will be a rate increase before the middle of the year. Analysts have predicted that before the close of the year the base rate will be at 1.25 per cent which will bring much higher returns than the current rate.
Savers have had to learn to be more aggressive when it came to choosing accounts. No longer could a basic savings account be opened and deposits made without a thought to interest earned for in some cases the account was eating up any earnings. Savers have been choosing short term fixed rate deals of late or instant access accounts in the event that the rate changed they would not be locked in to a lower return interest rate for too long.
It would do a saver well to discover more about any account that was opened over two years ago without being revisited in current years. A glance over the account and the interest rate paying on the account could reveal that a transfer to a new account may be in order. It should also be noted that there is a new industry standard in place that provides a transfer must be completed in a minimum of 15 working days and interest paid on the account within 48 hours of receiving the funds.
Individual savings accounts (ISA) are tax-free investment accounts. Currently savers can put up to £10,200 into an ISA for this tax year of which one half can go into a cash ISA. To get the high end of interest pay on deposits a saver will find that they will have to opt for long term rates. It should be noted that any withdraw on the account cannot be replaced to qualify for a tax free savings for the year.
There are many different products being brought to market to entice more savers to come into savings investment. Some are aimed at particular types of savers such as those saving for a home purchase deposit or parent’s saving for an education for a child. The good news is that the consumer became more aggressive in choosing accounts and banks had to become more competitive to grab transferred accounts. With better products brought to market the saver can pick and choose which account best suits their needs and that type of decision making produces a smarter saver.
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- Economic State of Today’s Interest Rates Forces Savers to Break Old Habits
- Becoming Educated About Your Savings Account is a Necessity to Make Sure Your Money is Working for You
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