With average weekly earnings now growing at 1.7 per cent, excluding bonuses, and inflation at just 0.3 per cent, UK savers are likely to have more money to invest in their future and more chance of finding a savings account offering above-inflation returns.
However, falling inflation and unemployment rates also take pressure off the Bank of England to raise the base interest rate beyond 0.5 per cent. Under these conditions, savings rates are likely to remain low, meaning individuals must shop around to find the best returns.
Typically the best rate for easy-access savings accounts in 2015 is approximately three per cent. For fixed rate savings accounts and cash ISAs, the top rates can climb beyond this figure, depending on how long you invest for.
Eight top tips to help you make the most of your money:-
Invest tax-free with an ISA – By investing in an ISA, up to the maximum annual limit (currently £15,000 and rising to £15,240 from 6 April 2015), you pay no tax on the interest you earn.
Review bonus rates – If you have a savings product with a bonus rate, make sure you review the rate when the bonus runs out and switch to a more competitive deal which includes transferring old Isa balances.
Invest more - Some savings deals have tiered rates which pay more interest the more you invest. Not everyone will have the level of savings to be able to take advantage of the highest rates but it is vital to note the differences so that you can try and reach the most appropriate level and not fall below minimum levels of deposits to earn interest.
Get more interest – Don’t lose out on any interest by making withdrawals from your savings account if they are not permitted. Also be aware that for some savings accounts you must pay in a fixed, regular amount each month, so don’t miss a payment.
Pay off debts – If you have a credit card or a loan balance, then before you start saving, you should consider paying this off first. This is because the rate of interest you are paying on the debt is more than likely to be higher than the rate you may get from your savings.
Don’t spend and save – Cut out non-essential spending such as your daily coffee or buying lunch (make it at home instead) and put the money in a jar. At the end of each month add this to your savings account.
Switch and save – something us Brits are not good at is switching financial products regularly to take advantage of bonus rates, cashback offers, rewards and the best rates. Regularly review your savings and other products to get the best deal available.
Review your energy tariff – If you are on a standard tariff, receive a bill through the post and don’t manage your account online, you are likely to be paying ten per cent more than if you run an online account paying by direct debit. With average energy bills at £1,265 a year and some firms cutting prices in the wake of the recent oil price crash, you could save £234 a year on average by changing.
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