Welcome to this week's
Finance Fridays. Last week we were looking at borrowing
options now interest rates have dropped. This week it is the turn
of savings. I had an email last week telling me that some of my
savings accounts will be having a cut in interest rates. This is to
be expected but with some savings rates dropping to 0.01% what are
the options now for savers?
Long term savings
accounts – If you don't need the option of instant access to
your money have a look at fixed rate bonds or accounts which require
a notice period in order to withdraw your money. Do be aware that if
you do need to withdraw your money early there is usually a penalty
in the form of loss of interest.
Stocks and shares –
After the EU Referendum vote the stock markets took a severe hit but
they have recovered now. You may not feel comfortable about investing
in individual shares so look at easy to invest in products such as a
Stocks and Shares ISA. Do be aware that the value of your savings in
such accounts may go up or down.
Swap current accounts
– Most free, basic bank current accounts stopped paying interest
years ago. However a number of banks have started to offer current
accounts with interest or cashback deals. You usually have to pay a
monthly fee or meet certain conditions such as paying in a minimum
amount of money each month but it could be worth your while. Some
also pay out a sweetener when you swap.
Peer-to-Peer – Also
known as P2P this type of savings scheme has grown in popularity in
recent years due to the returns that can be generated. Instead of
saving with a bank or building society you hand it over to a P2P
company who then lend the money out to companies and individuals. The
P2P will charge a fee for this but in return you could get a very
good interest rate depending on how much money you wish to invest and
for how long. The risk with this type of saving is if the P2P is
unable to fulfill its obligations to its investors as they are not
covered by the Financial Services Compensation Scheme (FSCS)
Whatever you decide don't
keep large sums of money in your house. It's safer to have it earning
no interest in a bank or building society rather than under your
mattress.
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Thank you for another timely post about finances Ness. I actually looked at my mortgage statement after your post last week and have increased my payments now the rate is low, so I am overpaying. Thanks for the reminders.
ReplyDeleteI'm waiting to see my new mortgage statement now the rate has dropped. At the moment we don't have a penny to spare but I love reading about my options for when my ship comes in!
ReplyDeleteI'm not sure I have the stomach for investing in stocks and shares but I know it is where we would probably get a better return from the money we have currently. Mich x
ReplyDeleteI am desperately trying to get my daughter to save but its like beating my head on a brick wall
ReplyDeleteI haven't had to think about this yet, sadly we just seem to have debt to juggle and not anything to save yet! But am trying to pay it off quicker now, so will bookmark for the future :) x
ReplyDeleteI really need to look into our saving options, most importantly we need a pension.
ReplyDelete