MARTIN Lewis has explained how to make your money work for you by boosting interest on savings.
It comes as millions of savers are earning dismal interest rates, yet aren’t switching accounts.
1
The money guru, who appeared on ITV’s This Morning today, said: “Interest rates were terrible six months ago, and they’ve got worse.
“If you’re earning less than 1.35 per cent, that’s not enough. You need to ditch it and switch.”
The rate, currently the top one among easy access accounts, is offered by Marcus by Goldman Sachs and Saga, although the latter is only available for over-50s.
Easy access accounts let you pay money in and withdraw it when you want, without being penalised.
But you can get an even better interest rate if you’re able to lock away cash, Martin said.
The top one-year fix pays 1.65 per cent in interest, and it’s offered by both Atom Bank and PCF Bank of minimum deposits of £50 and £1,000 respectively.
Alternatively, you can earn 1.80 per cent by locking away cash for two years with Atom Bank on a minimum deposit of £50.
Other ways to boost your savings interest
BELOW are other suitable ways to boost your interest, according to Martin.
- Pay off debts or mortgage first – If the interest rate on your debt is higher than on savings, then it’s often better to pay off your debt rather than save as you’ll be paying more on your debt than you’re earning on your savings.
- Help to Save scheme – The Help to Save scheme lets those on low incomes who receive universal credit or working tax credits save up to £50 a month. A 50 per cent bonus of up to £1,200 is then paid after two and four years.
- High-interest current accounts – Nationwide FlexDirect pays 5 per cent interest on the first £2,500 in it for the first year. So, if you move account that can be worthwhile for those with smaller savings.
- Lifetime Isa for first-time buyers – First-time buyers aged 18-39 saving in a Lifetime Isa get a 25 per cent bonus added on what you’ve saved (max £4,000 per year) to use towards your first home as long as it’s under £450,000. Moneybox currently offers the top rate at 1.4 per cent.
- Use auto-saving apps – Apps like Chip, Tandem, Plum and MoneyBox use algorithms to figure out what you can afford to save, then move money from your current account to your savings or investment accounts with them automatically. It’s a good way get into a savings habit, though some of them don’t pay the best interest rates.
Some longer fixes pay more, though keep in mind that if interest rates rise, you’re locked in and can’t switch to a better deal, Martin added.
But nothing stops you from using a combination of several accounts, so try and keep as much cash as possible wherever it earns the most interest.
If you can put money aside every month, another option is to open a regular savings account, Martin said.
These let you earn even higher interest rates, but you can only put aside limited amounts each month.
The top account currently on the market is Coventry Building Society’s regular saver, which pays 2.5 per cent on savings of up to £500 each month.
While Principality Building Society offers 2 per cent in interest on the same amount.
Current account customers with First Direct, HSBC and M&S Bank can also get linked regular savings accounts paying 2.75 per cent on maximum monthly deposits of £300.
We’ve made a round-up of the best savings accounts here.
All of the ones mentioned are covered by the Financial Services Compensation Scheme (FSCS).
This means that if you deposited cash and the bank went under, you would get your money back (up to £85,000 per person) from the FSCS.
Last week, Martin Lewis explained how auto-saving apps could save you cash without noticing – and they could boost your bank balance by thousands of pounds.
He’s also urged hard-up Brits to apply for the Help to Save scheme in order to get 50 per cent interest on savings.
While in January, Martin warned that 11million households are overpaying on their energy bills.
