Archive: MoneySavingExpert's Money Tips Email

Urgent savings update
Lock away up to £1,000,000 in total safety as National Savings launches a 6.2% 1yr best-buy - though it likely won't last long
Plus Santander launches 5.2% easy-access

If you've savings, check their rates ASAP. UK interest and mortgage rates have jumped, but almost all savings accounts lag far behind. Yet this week, not only can you boost what you earn substantially, but the top accounts are from big names too. So...

If your savings earn under 5%, and they're not locked in, ditch, switch and get paid far more

It's 5% because the best bog-standard top easy-access accounts pay that - so that's the bare minimum to earn. Of course, even that's still less than inflation. Yet that makes it even more important to maximise the rate to mitigate the damage. Here's the rundown of the top payers. All have at least the usual £85,000 savings safety protection.

Normally we start with easy access, but this week there's such a standout fix, we're going to lead on explaining fixed-rate accounts.

Fixed-rate savings, also known as savings bonds (be careful, lots of riskier things are called 'bonds' too), are where your money is LOCKED AWAY without access (except cash ISA fixes, see below) in return for you getting a guaranteed, usually higher, rate. And this week there's a big new payer...

How does NS&I compare to other fixes?

It pays more. Quite simply. Yet you may want a shorter or longer fix. So for completeness, here's our full rundown of fixes (though do note rates change rapidly, so check the latest top fixes in our guide). Today's top payers include...

• Top 6mth fixes: Monument Bank 5.56% AER (min £25,000), Secure Trust Bank 5.55% AER (min £1,000).
• Top 9mth fixes: Family BS 6.1% AER (min £10,000), Ahli United Bank UK via Raisin 5.79% AER (min £1,000).
• Top 1yr fixes: After NS&I, it's Ahli United Bank UK via Raisin 6.1% AER (min £1,000) and SmartSave 6.01% AER (min £10,000).
• Top 2yr fixes: Ford Money pays the top 6.05% rate (min £500).
• Top 3yr to 5yr fixes: You can get up to 5.96% over three years and up to 5.85% over five years, so you get less for fixing for longer.

Is now the right time to fix? Fixes are great if you want certainty on how much interest you'll get, but obviously if rates were to rise while your cash is locked away, making your fix no longer competitive, you're stuck with it. Only do it if you know you won't need to access your money during the term. 

The last time we saw a 1yr fix at 6.2% was 2008. One big clue here (though it's always guesswork and things can change) is that longer fixes pay less than short ones, which means the markets expect rates to drop (or at least not to rise much more) over that time. So this may well in hindsight be the perfect time to lock in.

The simplest form of savings accounts are easy access. With these you can put money in, including big lump sums, and take it out when you want. That means you get flexibility and can ditch at speed if they no longer pay decently. Though top fixes pay more (see above).

Yet as all easy-access accounts are AER variable, rates can and do change, so you need to monitor them. And they're changing rapidly at the moment, so do check our Top savings guide for any changes to the rates below.

• Top easy-access account - 5.2%. Santander's new Easy Access Saver Limited Edition pays 5.2% (min £1, max £250,000). It can be operated online and withdrawals are unlimited.
  
  Yet think of it as an account for a year only, because after that it 'matures' and it'll be moved to an Everyday Saver (which currently pays 1.05% or, as Martin describes it, 'a pants rate'), so you'll need to ditch and switch then.
  
  Santander's sister bank Cahoot also offers a similar account paying 4.9% (the banks share their £85,000 savings safety protection, so don't save more than this across 'em).
  
  Other top payers include Furness Building Society at 5%, and Shawbrook Bank at 4.93%. See our full list of alternatives in top easy-access savings.

PS: Existing Santander Edge customer? The linked saver pays 7% on up to £4,000.

The top cash ISA rates are up too. Good news for the millions with money in these tax-free savings accounts, or who need to open them. So let's start with Martin's clarion call...

'Everyone with a cash ISA, check what they earn now - even if they're fixed. Don't think they're locked in, millions can transfer and up the rate.'

Who are ISAs best for? The personal savings allowance (PSA) means you get a tax-free amount of interest earnable in ANY savings...

- Basic (20%) taxpayers can earn £1,000/yr of interest tax-free.
- Higher (40%) taxpayers can earn £500/yr of interest tax-free.
- Top (45%) taxpayers don't get a PSA.

Remember, that's the INTEREST you can earn. That means as interest rates have gone up, the amount you can have saved tax-free has gone down. At one point, you needed around £250,000 in top easy-access savings to generate it. Now you need a lot less...

So if you've got more, or may do soon, ISAs come into play...

A cash ISA is a savings account where interest is NEVER taxed. It doesn't count towards your PSA interest allowance either. You can put £20,000 in each tax year (so until 5 April 2024), and then once in, it stays tax-free year after year (see cash ISAs explained). Some who've maxed it each year can have over £100,000 in ISAs.

Yet usually CASH ISAS PAY LESS INTEREST than normal savings, so they're only likely a winner for those who earn enough to bust the PSA limit (or are close to doing so). Smaller savers should stick with normal savings, but if you'll pay tax on 'em, ISAs usually win, as the table shows.

Already have cash ISAs? Transfer to a top payer. If your existing cash ISA(s) earn less, all the ISAs above allow you to transfer them in. To do this, just apply for a new cash ISA, and as part of the application you'll be asked if you want to transfer your existing cash ISA over (don't just withdraw cash to move it, then it loses its tax-free status).

Locked in to a poorly-paying fixed cash ISA? Cash ISAs, even fixes, can't lock you in - they must allow you to withdraw, though can charge an interest penalty for doing so. Many who locked in over a year ago are on terrible rates, so should likely pay the penalty and move. And even if you locked in less than a year ago, it could still be worth it. Our Should I ditch my ISA? calc checks the maths for you.

Sharon used it, and emailed: "A few weeks ago, I read about ditching a low fixed-rate ISA for a higher rate. I had one year left of a 1.7% fix, which I transferred into a one-year fix at 4.4%. Even after paying a hefty 180-day interest penalty, I'll still be £1,200 better off. Thanks Martin, you've made another person very happy."

There are a few specialist savings options some can take which pay more. So here's our checklist of other things to look at...

1. Are you on UNIVERSAL CREDIT or Tax Credits? You may be eligible for an unbeatable 50% Help to Save bonus.

2. Do you have existing expensive DEBT? Paying off debt is usually more lucrative than saving. See our Should I pay debt with savings? guide.

3. Are you a wannabe FIRST-TIME BUYER aged 18 to 39? There's a whopping 25% bonus possible via top Lifetime ISAs.

4. Save regularly each month? Earn up to 7.5% in top regular savings.

5. There's nowt wrong with investing either. With investing, you aim for higher returns, but accept the risk you could lose some or all of your initial investment. We don't talk much about it, not because we're against it, just because it's not our area of expertise.

For many, over the longer run, investing is the right call. For an introduction, see Stocks & shares ISAs, but you'll need more specialised websites for help on what to invest in.