Brits banking with high-street lenders are being urged to ‘boost’ their balance by up to £250 by potentially moving their money into a savings account with a higher interest rate
Millions of Brits are being encouraged to make a ‘simple change’ that could result in a huge £250 boost. Households across the nation are starting to feel the full wrath of ‘Awful April’ which has seen a slew of major bills suddenly jump.
Experts predict the spike in Council Tax, TV Licence fee, road tax, and soaring energy bills will mean the average home is forking out more than £360 extra over the next 12 months. As a result, Brits have been urged to start being more savvy with their savings.
According to Birmingham Live, moving your savings from a poor interest account (generally considered to be anything below three per cent) is an ‘easy way to boost’ your bank balance. For example, stashing away £5,000 into a five per cent AER account would result in £250 of interest after 12 months – compared to just £150 in a three per cent savings account.
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Fiona Peake, a personal finance expert at Ocean Finance, says Brits should start saving as soon as possible – even if they’ve got as little as £50 to store away. “Investing early gives you the greatest benefit as your money is protected from tax and has more potential to grow,” she added.
“If you’re still using a standard savings account paying low interest, switching that money into a Cash ISA could protect your returns from tax, especially if you’re close to or over your Personal Savings Allowance… Keeping track of ISA contributions across different accounts can be tricky, but it’s important you don’t accidentally exceed your £20,000 limit or you’ll face a fine.”
If you’re banking with high-street lenders such as Nationwide, Lloyds, NatWest, or Santander – it’s worth checking to see if your bank is offering an easy way to boost your interest. For example, customers with a Santander Edge account can open up the Santander Edge Saver account which pays six per cent on savings up to £4,000 (although this includes a two per cent bonus for the first 12 months, meaning the rate will then drop).
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Should I open an ISA?
For those at risk of exceeding their Personal Savings Allowance – which is set at £1,000 for those on the Basic rate Income Tax band, £500 on the Higher rate band, and £0 for Additional rate taxpayers (there is also a starting rate for savings, which is worth up to £5,000) – moving your savings into an ISA is a great way to avoid being taxed on your interest.
Sometimes, ISAs offer better interest rates than standard savings accounts, meaning they could be a good option even if you’re not close to surpassing your Personal Savings Allowance. For example, Moneybox is currently offering a 6.71 per cent Cash ISA for three months (which then drops to 4.2 per cent). Similarly, Tembo is offering a 4.8 per cent Cash ISA which can be opened with as little as £10. Both of these offer a much better interest rate than, for example, Club Lloyds Advantage Saver – which is only offering 3.5 per cent.
In a situation where a savings account offers better interest rates than an ISA, it’s still worth reading the full terms and conditions. Many high-interest-rate savings accounts will limit the amount you can save each month – which isn’t great for those with a large amount of funds already. Many accounts may also penalise you for withdrawing money before your account matures – by either a transaction fee or a reduction in interest rates.
*This article does not constitute financial advice. Always read the full terms and conditions before opening up a Cash ISA or a new savings account.
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