How to make your savings work hard
Managing to put money aside each month is often a struggle, so you want to be confident that your savings are in safe hands.
Don’t allow any money you’ve amassed over the years to simply sit and rest in a current account, have a look at the variety of options available and consider ways to make your hard earned money go further.
The pros and cons of savings accounts
Your current account is handy and should provide easy access to your money at all times, but the chances are that it also offers a very low interest rate. If you want your money to grow, you need to consider swapping to a savings or deposit account.
The majority of savings accounts have a certain set of rules and regulations that restrict your access to your money. For example, you might open an account with the proviso that you won’t touch your savings within six months and incur a small penalty or loss of interest if you do. Think about how much you could afford to put aside and how confident you are that you won’t need to dip in regularly.
Building societies can also offer added benefits to savers – such as membership bonuses, but as with a savings account, you might need to balance up the thought of higher rates with the fact your money will not be as easily accessible. Most current accounts can be accessed from cash machines and Post Offices as well as branches and this often isn’t the case for building societies. Understand more about building societies and the ways they differ from banks with this useful article Ian Cowie at The Telegraph.
ISAs and senior savings accounts
An ISA – or an Individual Savings Account – is another option when you’re looking for ways to protect your savings. A Cash ISA will commonly offer a higher interest rate than an average savings account. What’s more, while the interest earned on most savings accounts is taxed at 20 per cent, the interest on an ISA is tax-free. For a simple guide to understanding how ISAs work, have a look at this ISA breakdown from Money Saving Expert.
As with savings accounts, you’ll find there are a large number of different Cash ISAs available, each offering different terms and conditions. Take the time to consider the benefits and potential downsides before signing your savings up. For some help weighting up different types of Cash ISAs, you might want to have a look at the ISA comparison guide from Which?.
A number of banks and building societies have also created a range of products directed specifically at savers over a certain age. These can sometimes offer bigger bonuses or better rates than the average savings accounts, but do often have stipulations – such as your age or whether you’re earning a pension or not. This is Money has a handy guide to some of the best accounts for older savers while the Mirror has also included the worst accounts on its guide to senior savers.
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