For more than a decade, interest rates in the UK have been in the doldrums. This is great news for those on variable rate mortgages but not so good for those with savings. It’s now harder than ever to find an account which offers returns that exceed inflation.
This means that while you might have more in the bank account, in real terms your money is worth less than before.
However, it’s not all doom and gloom. If you’re savvy about your savings you can get more for your money without risking it all. Here are a few ideas to consider.
Shop Around for the Best Deals
Although the rates on savings accounts are pretty poor all round, if you shop around you can still find certain deals which could make your money go further. This is particularly the case if you are able to do any of the following:
• Pay a regular sum into a savings account every month
• Link your savings account to a current account
• Lock in your savings for a longer period
If any – or all! – of the above sound like things you could accommodate, you may be well-placed to take advantage of the best deals on the market.
Forget about Loyalty
There’s something about staying loyal to your provider which just feels good, but in the current climate, loyalty really doesn’t pay. If you stay with the same bank the chances are that you’ll be missing out on better deals elsewhere.
Banks are desperate to attract customers so if you’ve got a good income, they’ll be fighting over your custom. Current accounts are traditionally not worth considering for savings, but at the time of writing, there is at least one paying 5% interest on savings for the first 12 months after switching.
Of course, after this initial period, you’ll need to start looking around again for a new deal. It may seem counter-intuitive but by being willing to move between banks, you’ll be able to access the best deals.
Consider Social Lending
A much more contemporary concept, social lending is a way to make your money work for you. There is some risk attached but for most who use it, it’s not unacceptably high.
Social lending works by allowing users to provide loans to other customers. These are carefully vetted for credit-worthiness so you won’t be lending to anyone considered to be a “bad risk”.
Those looking for a loan get the benefit of lower-cost borrowing without the need to go to a traditional bank or building society. Some social lenders suggest that those willing to provide loans could receive in excess of 8% on their savings every year, plus some also offer cashback rewards too.
You won’t have the protection of the FSCS so there is a risk that you won’t get all of your money back. However, many people successfully use social lending as a reliable way of maximizing their money.