Can you still get a decent return on your savings?

It is tougher than ever to make money from your savings, but you could get a better return if you expand your search for interest. Here are your options.

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This article is designed to offer you impartial guidance as to your options and what they might mean, but the decision on which product to take out is yours.

Where to start

If you have savings, find out what interest rate you are getting by contacting your bank or building society. Chances are, you could get more.

Even the smallest increase in your interest rate can make a difference, especially if you have a large amount of money saved up.

If you are just starting to save you should still look around for the best rates possible.

Inflation proof your savings

After tax, your savings rate must be higher than the rate of inflation, also known as the Consumer Prices Index (CPI), for your money to actually be growing.

The CPI is calculated by averaging the price of consumer goods and services.

If the CPI increases, the cost of consumer goods and services increase, so if your savings interest is lower, your money depreciates in value.

What to look for

There are lots of different types of savings accounts, and choosing the right one can help you boost the interest you earn.

  • Instant access accounts: These usually pay the lowest interest rate, like 0.1%, but you can withdraw and add money whenever you want. If you want to make a decent return, try and avoid these accounts.

  • Notice accounts: These can offer a slightly higher interest rate than instant access, but you need to give notice to make a withdrawal, like 60 days, or face an interest charge.

  • Regular savings: These can offer the highest interest rate of any savings account, but there is usually a limit to how much you can pay in each month. Some even restrict you from withdrawing in the first 12 months.

  • Fixed term accounts and bonds: These tie your money up for a set term, like one year. They do not offer rates that are much higher than notice accounts and restrict the access to your money even more.

  • Cash ISAs: These are tax free versions of the savings accounts above, but you could earn up to £1,000 in interest before tax from any savings account each year, making these accounts less competitive.

  • High interest current accounts: These can offer higher interest rates than savings accounts. However, they usually set a limit on how much you can earn interest on, for example £2,500.

Although interest rates are low at the moment, think about the access you want to your money. Usually, the more restrictive the account is, the more you could earn in interest.

Find out which savings account to choose here

Try something new

There are various ways you can invest your savings, even if you do not want to tie your money up for five or six years.

All investments give you the potential to earn more than a savings account, but they also put your money at risk.

Here are some of your options and where to find more information:

Peer to peer

  • Crowdfunding: You usually get a high interest rate, and your money is loaned out to people or businesses and repaid over the term you choose.

  • Innovative Finance ISA (IFISA): This is the same as crowdfunding, but you can use your ISA allowance to make any interest you earn tax free.

Share dealing

You can use a share dealing platform to buy and sell shares in listed companies.

However, the value of shares can fluctuate and go down as well as up.

Portfolio investments

You could get help from a financial adviser to help you build a collection of investments in one portfolio. These collective investments come in several types:

You may have to pay an adviser to help you create or manage these investment types.

Maximise the value of your savings by hunting down the best rates available.