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High interest savings options

By: Katharina Beath

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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.

Rates on the virtual high street rates tend be better than the rates you get on the actual high street. Internet-only accounts are cheaper for banks to run so this savings are often passed onto the consumer in the form of better interest rates.

Secondly, you should muster up as much cash as possible to deposit in one go. You will get a higher rate of interest the bigger the balance you have and thus 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.

Make the most of the current savings scheme available. ISAs were introduced by the Government in 1999 to encourage us all to save. This year the ISA allowance has been increased to ?10,200 for everyone and this means so although the 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.

Don''t ignore current accounts either. Although there are usually several conditions placed upon high-interest current accounts, when used in tandem with another savings account such as an ISA, they can prove to be profitable and highly worthwhile. Some current accounts are paying up to 5% interest on balances up to ?2,500 although you have to make minimum monthly deposits of ?1000 and can''t exceed the ?2,500 balance limit, but this is an easy way of saving.

Finally, be prepared to switch. Don''t be loyal to your bank just because you have been banking with them for years. They might have good current accounts but if you need to save then look for the best savings account on the market.

Article Source: http://depositarticles.com/

Katharina Beath is a economist with over 20 years of experience in the finance industry. They recommend Alliance and Leicester for high savings accounts.

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