Expert shares tips to ‘double’ the interest on your savings

While Britons grapple with high inflation eroding their purchasing power, savers are being urged to take advantage of the higher interest rates being offered to avoid “throwing hundreds of pounds away” a year.

New research by Paragon Bank shows a staggering £250billion is currently being held in instant access accounts earning one percent interest or less, representing 33 percent of instant access balances.

Further research by Shawbrook Bank revealed that despite the opportunity to capitalise on current rates, which are seeing some hit their highest levels seen in decades, only one in three savers plan to switch savings accounts in the next six to 12 months.

Adam Thrower, head of savings at Shawbrook, said: “Allowing money to accumulate in a current account when there are numerous competitive savings accounts available makes little sense. Doing this might seem like the easy option, but people could be throwing away hundreds of pounds a year.”

By assessing the savings market properly and opting into more lucrative accounts that are suitable for a person’s money habits, they can cash in on more than “double” the interest rates they’re currently getting, savings expert Lucinda O’Brien has said.

READ MORE: Switching savings provider could earn you an extra £319 a year Ms O’Brien said: “The first thing you need to know when assessing where you keep your money is the different types of savings accounts, as each has different terms and interest rates.

“Depending on your needs, you can easily switch to a different type of savings account that has a higher savings rate but it may mean you need to lock your money away for a certain amount of time.”

Easy access savings accounts

For those who want to keep it simple with an easy access savings account, Ms O’Brien said: “Financial providers such as Clearbank and Ford are currently offering savings rates of 4.26 percent (Clearbank – Chip Instant Access account) and 4.25 percent (Ford Money Flexible Saver account) – almost double the current average – and both can be opened with just £1.”

Oxbury Bank’s Personal Easy Access Account (Issue 1) is offering a particularly competitive interest rate for easy access accounts at 4.46 percent. Savers need a minimum deposit of £1,000 to get started and withdrawals are permitted at any point before 1pm on any day.

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Easy access accounts are typically more flexible, as these allow savers to make payments and withdrawals with minimal restrictions and with small opening deposit requirements.

Notice savings accounts

Those willing to give an agreed amount of notice before withdrawing their money can get an “even better deal” on a notice savings account, according to Ms O’Brien.

The Bank of London and The Middle East is currently topping the list with its 90 Day Notice Account (Issue 5) at 5.25 percent. However, savers will need a fund of £10,000 to open this type of account.

Cynergy Bank’s Online Notice Saver (Issue 6) requires a much smaller opening deposit of £500 and offers a savings rate of 5.15 percent. This account is a 120-day notice account and interest is paid on the anniversary of opening.

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Fixed rate savings accounts

Opting for a fixed rate bond, which is an account that offers an interest rate for a set length of time, can “boost the money-making power of your savings” even more, according to Ms O’Brien.

These types of accounts have been offering particularly higher interest rates, with some even boasting returns of up to 6.15 percent. For example, for both one and two-year fixed-term accounts, FirstSave is coming out on top with Annual Equivalent Rate (AER) of 6.1 percent and 6.15 percent respectively.

Interest is calculated daily and can be paid annually or monthly, and savers can open either account with a minimum deposit of £1,000. Up to £2million can be invested overall and withdrawals are not permitted during the specified terms.

Ms O’Brien said: “As you can see, there are options out there for every kind of saver, their budget and their needs, so don’t take your current savings rate at face value when there could be a better offer out there to make your money work for you at a time when every penny counts.”

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