January Savings Roundup

Each month, James writes a column for Around Town Magazine, which goes out to 60,000 homes and businesses in Essex.  His January column is reproduced here: 

The start of 2019 will undoubtedly see many commit to New Year Resolutions.  A recent survey from Inc.com found the following Resolutions to be the most popular:

  1. Diet or eat healthier (71%)
  2. Exercise more (65%)
  3. Lose weight (54%)
  4. Save more and spend less (32%)
  5. Learn a new skill or hobby (26%)

The only surprise to me was that changing job wasn’t in the top five (it was 7th) but diet, exercise and saving money are perennials on many a resolution list. Given this, I’ve pulled together my six savings tips to help you in 2019.

 

Pay off debts first

If you have credit cards, store cards, loans, overdrafts or other expensive forms of borrowing then focus on repaying these first. Banking is fundamentally simple – banks make money by lending the savings from savers to borrowers at a higher rate than they pay to savers.  Therefore, in the vast majority of cases, lending will cost more than savings. 

Paying debt off will be more financially rewarding.  The only exception to this principle is a mortgage – otherwise, focus on paying off debts first.  Pay off the most expensive debt first.  I often see people focusing on clearing the smallest debt first but paying off the most expensive will save you more in interest costs in the long term.

  

Saving is a habit – start the habit!

Like much in life, savings is a habit, so start forming that habit.  One of the best ways to start the saving habit is to set up a regular savings account.  Not only that, it is one of the most financially rewarding as interest rates on regular savings are much higher than those on easy access accounts and even five year fixed rate bonds. If you bank with First Direct, HSBC, or M&S, you will get 5% for paying in between £25 - £300 per month.  Customers of Nationwide get 5% on sums from £1 - £250 per month

Essex based Saffron Building Society pays 3.50% on amounts from £10 - £200 per month and accounts can be opened and run in their branches across the county or via post.  For those who prefer to bank online, or who want to save smaller sums, Virgin Money pas 3% on amounts from £1 - £250 per month.

Another great habit is to put a penny away on 1st January and then increase this by a penny every day e.g. 2p on 2nd January, 3p on 3rd January etc.  Do this every day by the end of the year and your final contribution of £3.65 will give you a balance of £667.95 for the year (plus any interest that you earn)  

 

Maximise your current account

It can be a challenge to save at times.  However, almost all of us have money in our current account at some stage of the month.  Nationwide pays its customers 5% on the first £2,500 held in a current account with them and Tesco Bank pays 3% on sums up to £3,000.  This is a great chance to earn money by doing nothing!

Banks will pay you to switch to them.  First Direct pays £125 for switching (and wins almost all banking customer service awards) and gives a free £250 overdraft.  Switchers to HSBC’s Advance account get £150 and those moving to M&S get £100 gift card plus another £80 gift card after 1 Year.  Halifax pays £50 straight away, £85 after 6 months and £2 per month – so £159 in total by the end of the first year.

With the government introduced Current Account Switching Guarantee (www.currentaccountswitch.co.uk), your new bank takes care of closing your old account, moving your balance and switching all your payments so you don’t have to worry about transferring all your bills.  You even pick your own switch date!  Over 4 million have switched so far.

 

Check the interest rate on your savings

Around 75% of the UK population keep their savings with their current account provider.  This is often not the most rewarding place to hold your savings with many of the high street banks paying interest rates of 0.1% to 0.5% on their savings accounts. 

The best paying easy access accounts (those which don’t require any notice to get your money out) pay 1.50%.  Marcus (part of Goldman Sachs), Virgin Money and West Brom Building Society all pay this rate.  Sainsburys Bank pay 1.45% and Essex based banks Ford Money (1.42%) and Shawbrook (1.40%) have been stalwarts of our best buy tables.

In fact, there are a dozen banks paying 1.40% or more on easy access savings with minimum opening balances from £1, there’s plenty of choice.  If your savings aren’t paying you a competitive rate – switch!

 

Buy Premium Bonds instead of Lottery tickets

Premium Bonds (www.nsandi.com/premium-bonds) have an annual prize fund of 1.40% - very competitive compared to the best easy access accounts.  They are government backed so 100% safe and you can invest from £100.  There’s a prize draw every month with 2 £1m prizes, 5 x £100,000 prizes and a range of prizes down to £25. 

The great thing about Premium Bonds is, unlike the National Lottery, you get your money back.  If you like the chance to win big but want to keep your money, take a look at Premium Bonds.  Over £91m of prizes were paid out in December 2018.

 

Make sure your money is protected

The government offers a protection scheme which guarantees savers deposits if your financial services provider fails.  The Financial Services Compensation Scheme (FSCS) protects deposits up to £85,000 per person, per bank, building society or credit union and up to £170,000 for joint accounts.  96% of UK savings and current accounts are FSCS protected – for free.

If you are unsure whether your savings are covered, there is a handy tool on their website www.fscs.org.uk which will tell you.

 

What are the best rates currently?

The savings market does move quickly, so we always recommend that you check our website for the latest rates.  At time of print, our best personal savings rates are:

 

 

Term

 

 

Interest Rate

 

Provider

Instant Savings

1.50%

Marcus, Virgin Money and West Brom

Notice

1.87%

Gatehouse Bank

1 Year

2.10%

Gatehouse Bank

18 Months

2.25%

Bank of London & Middle East

2 Year 

2.35%

Investec Bank

3 Year

2.42%

Al Rayan Bank

4 Year 

2.50%

Vanquis Bank and Union Bank of India

5 Year

2.70%

Atom, Bank of London & Middle East and Vanquis Bank

 

Good luck with your New Year Resolutions and have a great month.

 

 

About The Savings Guru

We help savers get the best deal for their money by providing unique insight in to the savings market.  We help prospective banks apply for a banking licence and we help build customer services, products and marketing for them.  We also work with existing banks and building societies to improve their savings propositions.  This  insider view of savings means we are uniquely placed to help savers.

Find out moreMeet the Team

Ask the Guru a Question

Your Name

Please let us know your name.
Your Email

Please let us know your email address.
Question

Please let us know your message.


Invalid Input