6 of the best homes for your money - Savings - News - Moneyfacts


6 of the best homes for your money

6 of the best homes for your money

Category: Savings

Updated: 20/05/2016
First Published: 20/05/2016

We're always being told of the importance of saving and building up a valuable nest egg, and this means that finding the best home for your money should be a top priority. So, with that in mind, we've compiled a list of the six best potential homes so you can make your money go further.

  1. Cash ISA. A cash ISA will be the first port of call for a lot of people, and with good reason – these accounts offer returns that are entirely tax-free for life, no matter what happens to the Personal Savings Allowance in the future, and with a lot of variable rate ISAs being easy access you'll be able to get your hands on your money should you need it. Currently the pick of the bunch comes from Al Rayan Bank with its Notice Cash ISA paying an expected profit rate of 2.02% AER, or if you'd rather not give notice to withdraw your money then the best rate comes from Coventry Building Society, with its Easy Access ISA (3) paying 1.30%.
  2. Fixed rate ISA. Fixed rate ISAs versions as they generally offer better rates, providing you're willing to lock your money away for a set period, and given that many of them come from well-known names, they may be preferred by people who value familiarity. Nationwide BS is the top player in this respect, with its five-year ISA boasting a market-leading 2.00%, while Al Rayan Bank is again the leader of the 12-month pack with an expected profit rate of 1.90%.
  3. Stocks & Shares ISA. Although a lot of people prefer the security of saving in cash, stocks & shares ISAs could be a great alternative for those seeking real growth. You get the same tax-efficiency but are investing in shares rather than keeping your savings in cash – your returns are based on the performance of the stock market rather than a set interest rate, and although there's the risk that those shares won't perform quite as well as you'd hoped (meaning you could end up with less than you put in) there's also the chance that they'll perform much better, offering the potential of higher returns. If you've got the risk appetite, then it could be worth considering.
  4. Fixed rate bond. If you've used up your ISA allowance or have a larger sum that you want to invest, then a fixed rate bond could be the solution. It'll offer much better rates than its easy access counterparts (the best rate for an easy access version, from RCI Bank UK, checks in at 1.45%), and if you're willing to tie up your money for a few years, it can offer great returns, too. Currently the top pick comes from FirstSave, with its 7 Year Fixed Rate Bond 5th Issue paying a highly competitive 2.75%.
  5. Current account. Think a current account can only be used for day-to-day spending? Think again! Right now there are several high interest current accounts that can offer highly impressive returns on your money, often outweighing those in the savings market, which makes them a viable alternative to traditional savings accounts. For example, TSB and Nationwide both offer accounts that boast in-credit interest rates of 5%, and although this rate is only available up to a set balance (£2,500 and £2,000 respectively), for those with a smaller savings pot you can't go wrong. then it could be worth considering.
  6. Credit card/debt repayments. OK, it might not technically be a home for your money, but if you've got existing credit card debts or overdrafts then you ALWAYS want to pay these off first before putting any disposable cash in a savings account. Why? Well, you just need to think about how much you're spending in interest compared to how much you're getting from a savings account. Let's say you had £2,000 on a credit card. Even a modest APR rate of 16.90% would see you pay upwards of £300 per year in interest, while if you'd put that £2,000 in the top-paying one-year bond from Al Rayan Bank you'd earn just £38 over the year. When you consider how much you're losing out, doesn't it make sense to use the money you'd save to pay off your debt instead?

As you can see, you've got plenty of options when it comes to finding a suitable home for your cash. Keep up-to-date with the best products on the market by using our best buy charts and comparison tools – after all, you work hard for your money, so why not make it work hard for you, too?

What Next?

Find the best savings rates with our best buys

Looking for a current account with high interest? - Use our whole of market bank account search

Check out our guide to 'Dealing with Debt'

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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