Do you know what interest you’re earning on your savings? Yes, rates are generally rubbish, but have you looked to see exactly what you’re getting?
Even if you have low expectations it’s probably less that you think. A lot less.
In the last few weeks, I’ve received half a dozen letters from banks telling me the interest rate on my accounts is going to drop. Some of them will be as low as 0.10%. And I wouldn’t be surprised if rates have also changed for any accounts you hold.
I don’t have any money in the accounts with really poor rates. They’re either old accounts I don’t use or accounts I’ve got for other benefits. But that doesn’t mean my savings haven’t been affected.
There have been cuts to the high-interest current accounts I’ve opened too, and I’ve a couple of regular savings accounts due to mature next month.
If you don’t open your post – or perhaps you’ve gone paperless and do all your banking online – it’s easy to miss these changes. If you do one thing today, it’s to check the current rate of interest on your savings.
Keeping cash in accounts earning less than 1% is a complete waste of time AND money. You can earn pretty decent rates RIGHT NOW.
How to earn 5% interest on your savings right now
High-interest current accounts
These sadly don’t pay as much as they did just a few months ago.
In January, TSB and Lloyds reduced how much interest you can earn on their current accounts. This followed Santander doing the same last November.
Plus my Nationwide account only offered 5% for the first year. It’s now dropped to 1%. I’ve since opened a Tesco account paying 3%, though that’s just been closed to new customers.
Despite the cuts, these are still your best bets for lump sums of money.
Highest interest rates for savers in current accounts
- Nationwide FlexDirect – 5% for one year on a max of £2,500
- Bank of Scotland – 3% on balances between £3,000 and £5,000, though you can have three accounts
- TSB – 3% on max of £1,500
- Lloyds Club – 2% on max of £5,000
- Santander 123 – 1.5% on max of £20,000, though with a £5 a month fee
Regular or monthly savings accounts
These savings accounts limit how much you can save each month, but are great if you are putting money away each month from your salary. It’s possible to get as high as 5% – though with each of these you need a current account with the bank.
I’ve got four of these, soon to be two as my TSB and Nationwide ones mature in March. But I’ll open a new Nationwide monthly saver and begin to reinvest the cash.
Best monthly saver accounts
- First Direct – 5%, max of £300 a month
- Marks & Spencer Bank – 5%, max of £250 a month
- Nationwide – 5%, max of £500 a month
- HSBC – 5%, max of £250 a month
You can also get a nice little bonus for switching to all of these except Nationwide.
There are some new entrants to the savings market which aren’t banks as we know them. They’re digital only, usually accessible via an app on your phone.
I’ve been trying one called Chip for the last month which offers 1% in interest. But you can increase it to a maximum of 5% by referring friends. There’a max of £100 deposited a day, but no upper limit.
The money isn’t protected by the Financial Services Compensation Scheme (FSCS), where if a bank fails you’d get up to £85,000 back from the government. But it is protected by Barclays, so you’d only lose your cash if Barclays was to go bust. It’s a risk, but worth a try.
If you want to try it, download the app below and use the code WV33X1 to claim an extra 1%, meaning you’ll start off at 2%. Or you can opt for a £10 bonus instead. Then, get a few mates to sign up and you it won’t take long to get 5% interest.