Archive: MoneySavingExpert's Money Tips Email

Stop the savings rip-off!
Martin: 'The top savings pay 8%, yet millions earn under 2%. DITCH & SWITCH to max every penny'
A masterclass to boost your earnings

Finally, for the first time since early 2021, top easy-access savings pay more than inflation. Then, they paid just 0.5% but inflation was rock bottom - now they're 5.2% and inflation's under 5%, yet other savings pay far more. It means money saved can again grow in real terms.

Yet most people still have LOSINGS, as they're earning diddy-squat, so money's shrinking. The banking roll-call of dishonour includes Halifax, TSB, Barclays, Santander, NatWest, RBS, Bank of Scot, Lloyds, HSBC, First Direct and building society Nationwide, which all pay under 2.5% on some easy-access accounts openable now. So CHECK yours.

The irony is some of these also offer best-buys, showing they prey on inaction or ignorance to make more. 5% is the absolute minimum you should earn. So let me run you through all you need to know. All accounts below have the full £85,000 per person, per institution UK savings protection. A few tips before I start...

- You can have multiple savings types & accounts, so if you've energy put each penny where it pays most (I've listed main types in rate order).
- Big savers? Your interest may be taxed - consider cash ISAs.
- On Universal Credit or first-time buyer? See special accounts.
- These are primarily for over-18s - for kids see top children's savings.

Regular savings accounts offer HIGH RATES on SMALL AMOUNTS. They're perfect if you put money aside each month out of regular income. Most usually last one year (then you can just open one again) and some lock the money away. Lump-sum savers who want to be 'on it' can move money out of normal savings each month into these, to earn more.

You can have multiple regular savers in different places, so combined you could save £1,000+/mth in them at high rates. The top payers are given as perks for current account customers and two currently pay bank account newbies up to £200 to switch, and give access to the regular savers too.

• First Direct 7% FIXED for a year on £25 to £300/mth. While the interest's a tad lower than Nationwide below, you can put in more, so total interest is higher - a max of £135 interest over the year. Don't have FD's current account? Switchers get a FREE First Direct £175* plus a top debit card for spending abroad, and many get a £250 0% overdraft. Full info in FD eligibility & review.
  
  
• Nationwide 8% VARIABLE for a year on up to £200/mth. Maxed over a year at current rates you get £103 interest. It's a flexible account letting you make 3 withdrawals a year, and you needn't contribute every month. Don't have a Nationwide current account? Switchers get a free £200. Full info in Nationwide eligibility & review.
  
  
• Bank with Yorkshire, Skipton, Lloyds, NatWest, TSB, Halifax, Bank of Scot? All have linked regular savers which pay 5% to 7.5%, if you bank with them. Check top bank-linked regular savers.
  
  
• Top regular savers not linked to banks. Anyone can open Saffron BS's 5.75% variable for a year (max £50/mth), though Coventry BS's 5.5% variable lets you put in a much bigger £500/mth.

With lump-sum savings, grab a top fix and your money is LOCKED AWAY without access for a set time in return for a HIGHER GUARANTEED RATE than easy-access savings (fixed-rate cash ISAs pay a little less, but don't lock your cash away, which can be a boon for some).

Since the Bank of England held its base rate in Aug, we've seen fixed rates come off their peak, as they're set based on the view of interest rates over the fixed period, and that's got lower. This is evidenced by the fact one-year fixes have recently out-paid longer deals (though today a three-year one has sneaked in that's higher), as the markets think we may see rates drop in the 2nd half of 2024.

The rates below are correct at the time of sending the email, but they change rapidly so for safety, check the latest top fixes.

• Under 1yr: Monument Bank (min £25,000) 6mth 5.57% & 9mth 5.62%, Hampshire Trust Bank (min £1) 6mth 5.56% & 9mth 5.61%
• 1yr: Metro Bank 5.8% (do see note (1); min £500), Secure Trust Bank 5.66% (min £1,000)
• 2yr: Hodge Bank 5.51% (min £1,000), Melton BS 5.5% (min £1,000, online account min £5,000)
• 3yr: FirstSave 5.85% (min £1,000)
• 5yr: 5.5% is the best rate out there

Is it worth fixing now & for how long? Crystal ball time. The differential between fixed rates and easy access has dropped, but fixes still pay more. And while top fixes are only 0.4% off their peak, the current mood music is they'll continue to shave down (though things can & do change), so if you can lock cash away, it's not a bad time to fix.

Plus if we do see UK rates drop again, fixes have the benefit of certainty, while easy-access rates can drop.

As for how long to fix, you earn most with shorter fixes. Yet if you're risk-averse, there's an argument that says if rates do come down, you may want to grab a longer fix now as you get certainty for longer. 

If you've used what you want of the accounts above, then the rest goes in easy-access savings (or cash ISAs, see below). With these accounts you can MOVE MONEY IN & OUT when you want, though the INTEREST IS VARIABLE so it can change, and you should monitor them. Full info in Top savings as rates change rapidly.

• Top 'if you bank with us' account: 7% on up to £4,000. New or existing Santander Edge* bank customers get 7% AER variable on £1 to £4,000 with unlimited withdrawals in its linked saver - far higher than owt else easy access. The current account has a £3/mth fee but gives 1% cashback on most bills and 1% on supermarket/travel spending, up to a max £20/mth total, so is a good option as a bills account. Full Santander Edge eligibility & review.
  
  
• Top unlimited-withdrawal accounts open to all. Metro Bank's 5.22% (£500 to £2m) is top rate (but do see note (1)). Next, only a smidge less is NatWest Group's Ulster Bank's 5.2% (£5,000 to unlimited). For smaller opening balances there's Hampshire Trust Bank's 5.15% (£1 to £250,000) and Santander-owned Cahoot's 5.12% (£1 to £500,000). Full options in top easy access.
  
  

Cash ISAs are savings accounts where interest is NEVER TAXED. In recent low-rate years most haven't paid tax on any savings interest, yet rapid rate rises have changed that and more people should therefore be looking at cash ISAs...

Will you pay tax on normal (non-ISA) savings interest? The personal savings allowance (PSA) means you get a tax-free amount of interest earnable in ANY savings...

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

That's the INTEREST you can earn, so as interest rates have gone up, the amount you have saved before you earn enough to pay tax has dropped. At one point, you needed around £250,000, now...

Cash ISA interest is always untaxed. Cash ISA interest doesn't count towards your PSA. You can put £20,000 in each tax year (which ends each 5 April), and then once in, it stays tax-free year after year (see cash ISAs explained). So you can see how some who have maxed it each year can have over £100,000 in there.

However, usually cash ISAs PAY LESS than normal savings, so they're only 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've got more, ISAs usually win, so fill your boots here first.

Already have cash ISAs? Transfer to the top payer. If your existing cash ISAs earn less, most of the above allow you to transfer into them, so...

'Everyone with cash ISAs, check what they earn now - even if they're fixed. Millions can transfer & up rates'

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 yourself to move it - then it loses its 'cash ISA' 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 money, though they can charge an interest penalty for doing so. Many who locked in a year or more ago are on terrible rates and should pay the penalty to move.

As Rita emailed: "I switched my cash ISA from Newcastle Building Society at 1.6% to Virgin Money at 4.17%. I had a 120-day interest penalty, but I have increased my annual interest by over £2,000. Thanks MSE." She used our Should I ditch my fixed ISA? calc, which checks the maths work for you.

PS: In the Autumn Statement the Chancellor announced a few changes and improvements to ISAs starting next April.

There are a few specialist savings options, not always open to all, which may pay more. So here's our checklist of things to look at...

1. Are you on UNIVERSAL CREDIT or Tax Credits? You may qualify for an UNBEATABLE 50% Help to Save bonus. Nothing else comes close - great for financial resilience - as Anoushka emailed: 

"I'm nearly at the end of my 4 year 'Help to Save' after religiously depositing the max £50 each month. So I'm nearly due my 2nd £600 cash bonus. I strongly advise anyone eligible to take advantage of it and to do your best to keep up with the max. I've got used to being £50 worse off each month and the time has flown by - now I will feel 'better off'. It's quite addictive once you get used to it!"

2. Are you a wannabe FIRST-TIME BUYER aged 18 to 39? There's a whopping 25% bonus possible via top Lifetime ISAs if you're buying a first home under £450,000 (so ensure that's the max price). Apart from Help to Save it's an absolute winner if it's right for you. 

As Jordon emailed: "Another Lifetime ISA success for you - I saved for seven years and my partner six, so we got £13,000 towards our deposit from the Government. With interest that got us to a 20% deposit on a £330k property we completed on a couple of months ago."

3. Do you have expensive existing DEBT? Paying off debt is usually more lucrative than saving. See our Should I pay off my debt? guide, our Should I overpay my mortgage? guide, and use our Mortgage Overpayment Calculator.

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

Yet I want to be plain, 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.

-------------------

(1) Metro Bank: On Monday it agreed a £925m refinancing deal after worries about its finances - that will hopefully sort it. That's likely why it's top in a number of categories, as it wants to bring in deposits. The key point is ALL money up to £85,000 per person in there is protected under savings safety rules. If you've more, as always, it's worth questioning if you should be spreading it elsewhere.