Switch To A High Interest Savings Account

By Author: Bonny Kominek
Total Articles: 32
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Now is a hard time for savers. The base interest rate set by the Bank of England is still at the record-breaking low of 0.5%. Its rather annoying for consumers that banks aren''t passing this great rate on to mortgage borrowers or people taking out loans, but they are using it to keep interest rates low on savings.

What with inflation being 3.7% coupled with these uninspiring interest rates finding a savings account is an uphill slog. But thankfully, it isn''t impossible.

The best place to begin your hunt is online. Comparison websites collate all the information on one page saving you a lot of time and hassle and can open your eyes to accounts you didn''t know existed or hadn''t considered a good bet.

Also, some high-street banks actually offer better rates on the virtual high street, i.e. the Internet. Internet-only accounts are cheaper for banks to maintain therefore many institutions will pass on these savings to you, the customer.

Secondly, once you have found an account, deposit as much money as you can in one go. The bigger the balance, the higher the rate of interest you will be offered and ...
... seeing as interest works on percentages, the more you have the more you will get in real terms.

It''s not just higher amounts that equal better interest rates, but the length of time you ar prepared to lock your money away for too. You may lose flexibility and the opportunity to withdraw the money whenever you want without incurring a penalty, but the gain in increased interest rate usually more than makes up for this inconvenience.

Just because something seems to good to be true doesn''t mean it isn''t. ISAs are tax free savings accounts and although their rates aren''t as good as bonds, the fact that you don''t pay any tax on your interest means they are actually one of the most profitable mid-range ways of saving. You can now save up to ?10,200 a year in an ISA.

Current accounts are looking particularly attractive at the moment. Although there are a great many restrictions meaning that they work best when used in tandem with another savings account such as an ISA, current accounts are paying up to 5% interest on balances up to ?2,500. You have to make minimum monthly deposits and can''t exceed the ?2,500 balance limit, but this is an easy way of saving.

Finally, be prepared to switch. When it comes to making money from your money, don''t worry about being loyal. Just because you have been with your bank for years doesn''t mean they are necessarily the best. Bonny Kominek is a economist with over 20 years of experience in the finance industry. They recommend Alliance and Leicester for high savings accounts.