The start of a new year is always a good time to sort out your finances, and this year, focusing on your savings should be at the top of the agenda. Savings rates aren't great at the moment which means you'll need to be proactive if you want to secure the best returns, so we've got a few tips and tricks to help make your savings go further in 2017.
The first thing you need to do is check what rate your current savings account is offering. Sounds simple enough, but surprisingly few people know what rate they're on! Research from Masthaven Bank, for example, shows that just 8% are confident that they're getting the best rate, while 61% aren't confident or are unsure if they're on the best deal. Don't be unsure – check your rate, then start seeing what else is out there.
Research is key, particularly in the current climate where rates can change on a seemingly daily basis. Masthaven Bank's research shows that 27% of respondents have been put off shopping around believing that there are poor deals everywhere, while 18% said they can't keep up with the market, but don't be disheartened – there are good deals to be found, you just need to take your time to compare the options.
However, you shouldn't just focus your search on well-known names. High street banks typically offer the lowest rates (take a look at our savings Best Buys and you'll see a distinct lack of high street names), and loyalty rarely pays off; just 29% of savers trust that their main bank will provide a good rate, so it's time to start thinking outside the box.
Smaller providers are often the way to go. These banks almost exclusively pay higher rates than their better-known counterparts, and as they come with the same kind of financial protection as high street names, there's no reason not to give them a go.
As well as considering challengers, you may want to look beyond traditional savings accounts, too. These days,
high interest current accounts can offer a great alternative – they offer interest rates of up to 5%, far more than any savings account currently on the market, and although they come with certain restrictions, they could be a great home for at least a portion of your savings.
Another option could be stocks & shares ISAs. Again, these offer the potential for higher returns than their cash-based counterparts, but just make sure you're happy with the level of risk involved. Because you're actively investing in the stock market, your returns are based on the performance of your chosen funds, rather than a set interest rate, which means you could end up with less than you put in. However, the potential for better returns could outweigh the risk for some – find out more about this method of saving here.
Why save on your own when you can benefit from Government input? There are several schemes aimed at helping hard-pressed savers, particularly younger ones, and if you qualify, your savings pot could get a definite boost.
One scheme to consider is the Help to Buy ISA. If you're saving up for your first home, this account allows you to save up to £200 per month, and if you do, you'll be eligible for a Government bonus of 25%. This means that for every £200 you save, you'll receive a Government top-up of £50 (up to a maximum of £3,000), which could go a long way to building a deposit. The rates on offer tend to be far better than with regular accounts, too, giving you an even better chance of reaching your goal.
Then there's the Lifetime ISA, which will be available from April this year. These accounts can be opened by savers aged between 18 and 40, and have been designed to be used for a first home or a pension. You can save up to £4,000 each year, and any deposits made before your 50th birthday will be entitled to a 25% Government bonus; however, you'll only be able to access it for a house purchase or a pension (once you're over the age of 60), unless you want to pay a penalty.
If that kind of Government support isn't appropriate – or even if it is but you want a savings account for a different reason – it's time to switch to a new deal! Masthaven's research went on to reveal that 23% of savers actively seek out good rates, with 40% having switched or thought about doing so in 2016. Furthermore, 22% of those who aren't confident they're on the best rate said they're likely to switch in 2017, so why not join them?
It couldn't be easier to take the plunge. Many providers offer the chance to arrange the whole thing online, so all you have to do is search for the best rates, pick your account and you're good to go! You can easily transfer funds between accounts, too, so it shouldn't be too much hassle to get things moved over.
Just make sure to check your terms and conditions – some providers have certain rules when it comes to how you can transfer funds, and if you're on a fixed rate deal, you may not be able to access your cash before the term ends (without paying a penalty). Another caveat is in terms of ISAs, which have a set transfer procedure; if you don't follow the steps, your pot may lose its tax-efficiency, so find out more about ISA transfer rules
before going ahead.
If you want your savings to work harder this year, it's time to take action. Start comparing saving accounts to get the best rates possible.
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.