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It’s a big ask to put money into savings what with the cost of living crisis and energy prices, despite being lowered next month, taking a big chunk out of your income.
In an ideal world you’d have three months of compulsory spending stashed away for a rainy day – those unforeseen events and emergencies that like making a surprise dent in your dosh.
The Bank of England has held the base rate of interest at 5.25% this month (Sept) after 14 rises on the trot, to try and curb inflation.
After a decade of paltry rates, savers now have choice if they want to get more from their money.
A lot depends on how quickly you might need access to your cash as to whether you put it into savings accounts, ISAs or a variety of investments.
A savings account simply allows you to earn interest on money you put in. Interest is tax free and most people won’t pay any tax on it at all. Basic rate tax payers can earn £1000 per year and higher rate taxpayers £500.
We’ve done our research to put together some of the best options out there, but click on the links and read all of the terms and conditions really carefully before committing, because everyone’s needs are different.
Also make sure that your account is covered by the FSCS Scheme which protects your savings up to £85,000.
Like the name suggests, you can save, get interest and withdraw money whenever you want, but the rates are variable and because they can go up or down, check regularly what providers are offering so you get the best deal.
Those without maturity dates do have variable interest rates and in this financial climate, who knows how the rate might change in a couple of years.
These tend to offer better interest rates but you do have to commit to saving a minimum amount every month. You also have to hold another product from the same provider, more often than not, a current account. The idea being that you can fund the regular saver by a standing order from the linked account.
With these accounts you have to give notice when you want to access your money. That period can vary from 30 days up to 120 days, although beware and read the small print because some accounts require notice of 6 months to a year so don’t be caught out.
These offer rates above the easy access and do stop impulsive withdrawals
If you are a low-income worker then you can still save with a government scheme which offers a 50% savings bonus – called Help To Save –check out our detailed guide here.
It gives earners claiming universal credit or working tax credit a chance to save between £1 and £50 a month but you don’t have to save every month. At the end of 2 and 4 years, you’re paid a 50% bonus up to a maximum £1200. It is easy to access and you can make withdrawals when you need them. To qualify you need to be a UK resident.
Finally, there is one savings account we like that does keep up with inflation although it doesn’t give you interest. Tallymoney, www.tallymoney.com It keeps your money in line with inflation by basing the whole account on gold. Historically gold has generally kept up with, and sometimes even outstripped, inflation, so money that is held in gold is more likely to hold its value and keep up with the rising cost of living than pounds and pence.
With Tallymoney you transfer cash into the account then get a card to use in shops to buy anything from a coffee to a car – whatever you’d normally buy with a credit or debit card.
It’s great to use abroad too as there’s no foreign exchange charge – you’re just paying with gold even if it’s in dollars or euros or yen at the time.
The account does charge a fee – 0.9% a year – and there’s a small charge to set up the account at the start (£19) but other than that it is a solid alternative to savings accounts in banks, and better for keeping up with inflation.
For more money management help and advice on how to look after your savings, check out more of our articles here:
Disclaimer: Information is true at the time of publication. MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.