Martin Lewis was on hand to answer queries from members of the public yesterday, via the Ask Martin Lewis Podcast. During the instalment, a caller contacted him to ask a question about savings accounts.

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The caller, Lynn, had been in touch as she was wondering where she could put her savings in order to get the best interest rates.

Explaining she was looking to store a lump sum in the thousands, she confirmed to Mr Lewis that she had a mortgage, but was otherwise debt-free.

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Having asked what the current rate she was paying on the mortgage was, Mr Lewis firstly addressed the payments she was making.

He said: “It’s worth saying you ain’t going to do anything better than overpaying your mortgage.

“At 2.5 percent tax-free, there’s no savings accounts out there. So you could look at overpaying your mortgage.

“Make sure it goes to reduce the capital that you owe.

“Make sure that you’ve got at least six months of bills put aside at the same time, and most mortgages will allow you to overpay up to 10 percent a year.

“So I would look at doing that in the first instance, it’s something to investigate.”

The caller explained that she does currently make overpayments on her mortgage.

Mr Lewis went on to address where the saver could put money which would cover six months of bills – something which he suggested they would have easy access to.

“Where do you put that? We start with the top easy access accounts which are Marcus and Saga at 1.2 percent. They’re actually sister banks – 1.2 percent easy access,” he said.

“No-one should have savings paying less than that unless you’re a very high rate taxpayer and then we’ll get involved in another discussion.

“Most people are earning about 0.1 or 0.01 percent. So 1.2 percent easy access – put your money in when you like, take your money out when you like – is an absolute winner on top of that.”

The financial journalist went on to address other savings options, such as fixed-rate accounts.

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“You can get more. Top one-year fixed at the moment is the Habib Bank Zurich,” he said.

“It’s a UK-registered bank though so you’ve got the full £85,000 savings safety protection. That’s 1.55 percent fixed.

“There’s FCMB bank via the savings platform Raisin, for two years at 1.66 percent.

“If you’re willing to lock cash away and you don’t need access, then you can fix right now.”

Those who wanted to fix but who are uncertain whether they’d need to access the money could also opt for another type of account, with Mr Lewis pointing out a “hybrid”.

He said: “There is a hybrid, which, going back to Marcus and Saga, at 1.45 percent for one-year fixed.

“With those, not just in emergency conditions, you can withdraw your money, you just lose 90 days-worth of interest for doing it.

“So you can put money in there on the assumption you won’t need it, but in case you did in an emergency, you have a 90-day any reason you like, just remove it and pay penalties.”

Mr Lewis went on to point out that the minimum interest rates the saver should be looking at for these savings would “definitely” be more than 1.2 percent as a minimum – adding that it’s down to the saver as to whether they opt for fixed rates or not.

The Emma Barnett Show airs weekdays on BBC Radio 5 Live from 10am. The Ask Martin Lewis Podcast is available to listen to now on BBC Sounds.

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