Getting a decent return from your savings takes more than putting money in the first account you come across. Choose poorly and you won't come anywhere near to securing the best rate, and if you get complacent, you could even end up with a lower rate than you had before.
Rates may not be hugely enticing at the moment but that doesn't mean you have an excuse to not bother. In fact, this is why it's even more important to be suitably prepared, so just how can you get the best returns from your savings? We've come up with a few tips to help you out.
This is perhaps the most important tip of them all, because if you don't shop around, how will you know if you've got the best deal? There are so many different products available these days that it could pay to do a bit of research, because those few extra minutes could make a world of difference to your savings pot.
Securing the best rate will of course be at the top of your agenda, but pay attention to opening or withdrawal restrictions so you can be sure you've got an account that suits your needs. Don't always opt for the big names either – high street banks tend to offer lower rates than their lesser-known alternatives, so make sure you check out our best buy tables to get a true picture of which providers really come out on top.
While you'll always need an easy access savings account for that all-important emergency fund, if you're saving up for something specific you could do well to opt for a fixed rate version instead.
Fixed rate accounts invariably offer higher rates of interest than their easy access counterparts, on the provision that you lock your money away for a set amount of time. But if you're comfortable with making that kind of commitment, it could be a great way to see your balance grow.
Some variable rate accounts come with an introductory bonus that will usually fall away after 12 months, which could see your rate drop significantly. Make sure you review your rate on an annual basis to make sure it's still the best out there, or if you'd rather keep things simple, then look for an account that doesn't come with a short-term bonus added in.
However, it's important to remember that you'll still need to make sure you're getting a great deal, whether or not your account came with a bonus. Reviewing your rate on a regular basis will be a must, particularly if you've got a variable rate account, and if you're not getting the best returns possible don't be afraid to switch.
Think a traditional savings account is the only option if you want to save your hard-earned cash? Think again! These days current accounts can be a fantastic alternative, with high interest versions paying far more than any savings account on the market.
The only caveat to this is that most will come with certain restrictions, such as a minimum monthly funding requirement or a limit on how much of the balance will earn interest. But, when you could earn up to 5% on a portion of your savings, this type of account could be a valuable addition to your savings portfolio.
If you only have one savings account, make sure it's an ISA. Any interest you earn in an ISA will be entirely tax-free, unlike a traditional savings account where the taxman takes a chunk of any interest you earn, so it makes a lot of sense to maximise your tax efficiency. Thanks to the limit having recently been increased to £15,000 you could earn even more, so always make the most of this kind of account and save as much of your allowance as you can.
If you're comfortable with an element of risk, it could be time to take things up a notch. Stocks & shares ISAs, for example, have the same tax benefits as their cash-based counterparts but offer the potential for much higher returns, with the caveat that your investment could be at risk if your chosen stocks don't perform well. It's a definite trade-off, but if you've got that kind of risk appetite, it could be a great way to maximise your returns.
Compare the best savings rates in our best buys
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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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