I’ve finally ditched ’em. I’m so fed up with the paltry rate I can get on a normal savings account, for the first time in my working life I don’t have one at all.
It’s little wonder when I look in horror at the MSE Top Savings Accounts page and find the top easy access account is a miserly 1.75% before tax — such is the state of the savings market.
It doesn’t feel that long ago I was putting money away with my bank at 10%. But such rates are just a pipedream now.
I have a cash Isa as the long-term tax-free benefits are great, but no standard account.
Instead, I’m primarily going to pay off more of my mortgage, as I won’t get hit by penalties as long as I don’t overpay by more than 10% of the balance each year.
As I have a flexible mortgage, the cash I pay in reduces the amount I pay interest on, and I can borrow back anything I’ve overpaid, so it’s effectively a way of saving.
For example, if I have a £100,000 balance and pay in £5,000, I only pay interest on £95,000 of my mortgage.
As my mortgage rate is about 2.8%, I get the equivalent of roughly 2.8% interest on my savings, but with the added bonus that any gain is not taxed.
Had I got a normal 2.8% savings rate, I’d have actually earned much less after tax. But now I really do get that equivalent rate.
I’m also going to open a Santander 123 current account, which pays 3% interest on balances up to £20,000, as a home for extra cash.
Moving to Santander fills me with dread, as its customer service feedback is awful. When I’ve had products there in the past, I’ve found its internet banking poor, its call centre unhelpful and its credit card statements unnecessarily loaded with extra paper — those poor trees.
However, 123 customers rate the bank better than its other customers from our most recent poll, so hopefully my gamble pays off.
So it’s goodbye to savings for now. I hope we can be reunited in future, but I need a break.
What are your thoughts? Let us know in the comments section below or in the forum discussion.