Research from Shawbrook has found that nearly a quarter (23%) don’t know what interest rate they are currently getting on their savings account. Adam Thrower, Head of Savings at Shawbrook, said: “Despite higher interest rates, far too many UK savers are having the life sucked out of their savings by inflation.
“Savers need to check that they are making the most of current high-interest rates on offer, ensuring their hard-earned money works harder. It may be spooky season, but that’s no excuse to ghost your savings. Reviewing their current rate, and considering the other rates on offer, as well as the tax implications are all vital. So too is how accessible the cash is and whether its available at short notice should it be needed. Switching now will help avoid being haunted by poor financial decision making.”
Adam’s guidance on taking action on savings:
You’ve ghost to be kidding me
16% of savers say it is too much effort to switch accounts but by ghosting your savings you might be missing out on significant opportunities. Savers can avoid the bite of rising inflation by adding a drop of higher interest rates to their savings and using comparison websites to find the best rates. The Shawbrook Easy Access Account (5.11%) is one high interest option to consider.
Don’t chop into your returns
It’s important to defend savings against the personal savings threshold using the power of ISA accounts. Savers’ returns are at risk of being chopped if earnings on interest exceed the limit, which has caused a 59% increase in 1-year fixed ISA accounts opening in comparison to last year. An ISA account allows saving of up to £20,000 tax free per tax year, allowing savers to earn £100s more on their savings, it’s like witchcraft! But savers do also need to assess whether their savings have a chance of pushing them over the tax-free limit. If they have existing ISA deposits, they can be transferred without affecting your yearly allowance using the Cash ISA Transfer Service.
No need for a fright
Switching can feel like taking a financial leap, but it really needn’t. Balances of up to £85,000 are protected in accounts covered by the Financial Services Compensation Scheme (FSCS), so switching is nothing to be concerned about. In fact, the FSCS protection scheme covers deposits, insurance policies, self-invested personal pensions and more.
Avoiding ‘zombie savings’
It’s all too easy to let cash accounts turn into ‘zombie savings’, plodding forward with little effort or purpose. Giving a purpose to a saving pot helps decide what’s best for it, and how it can be made to work toward that goal. This means taking advantage of current interest rates as well as the huge range of financial products available to help protect returns against tax. For example, there are a range of ISAs that not just help protect returns on interest, but that are built with specific life goals and life stages in mind.
