Earn 8% on your spare cash

Smart savers should seize these super-high savings rates!

With the base rate stuck at 0.5% for the past 31 months, savers have been really struggling to earn decent returns on their cash deposits.

Sadly, as the cost of living has risen by 5.2% over the past year, most savings pots are worth less today than they were 12 months ago.

Curing sickly savings

So, what can sensible savers do to maximise their cash returns, without taking needless risks? The simple answer is to switch your savings to Best Buy savings accounts paying top rates of interest.

Among everyday accounts, it's hard to beat the Nationwide BS MySave Online Plus Issue 4 account, which pays 3.12% AER on £1,000 to £3 million, including a 1.58% fixed bonus for a year. This account allows one free withdrawal each year, so it's ideal for 'hands off' emergency funds.

Save regularly

However, for savers who like to squirrel away a little every month, one of the best ways to improve your interest rates is to use regular-savings accounts.

In return for agreeing to make, say, 12 monthly deposits of at least a certain sum, top regular-savings accounts pay rates of between 4% and 8% a year, before tax. The accounts at the top end of this scale do come with strings attached, so I'll split these Best Buys across two tables, as follows:

1. Regular saving with strings attached

*Account*	*Interest* *(AER)*	*Min/Max pm*	*Notes*
first direct Regular Saver	8.00	£25 to £300	Must hold a first direct 1st Account
HSBC Regular Saver (Preferential Rate)	8.00	£25 to £250	Must have or open an Advance, Graduate Advance, Passport or Premier account.
Nottingham BS Starter ISA Issue 1	5.00	£10 to £445	This rate applies until 05/04/12.
Norwich & Peterborough BS E-Family Regular Saver and Family Regular Saver	5.00	£1 to £250	Rate includes 1.65% bonus for a year. 3% interest lost for missed payments and withdrawals. Only for those with dependent children up to 16, or 18 if in full-time education.
Norwich & Peterborough BS Gold Savings	5.00	£20 to £250	Only for new and existing N&P Gold Current Account customers into which at least £500 a month is paid.
Santander Loyalty Fixed Monthly Saver Issue 1	4.99	£20 to £250	13-month minimum. Only for existing current account customers funding account with £1.000+ for last three months, or customers switching their current account using the transfer service.

As you can see, these accounts aren't available to everyone and most require you to switch your current account to qualify for these high rates of savings interest. Likewise, missed payments and making withdrawals will be penalised, so these are only for committed monthly savers.

Even so, HSBC and its premium brand, first direct, are willing to pay 8% on monthly savings for new and existing customers. Savers with these two banks should snap up these very, very generous rates. Similarly, for savers wanting to build up tax-free cash inside an ISA, the Nottingham BS Starter ISA Issue 1 pays 5% tax-free on up to £445 a month paid in.

2. No-strings regular saving

*Account*	*Interest* *(AER)*	*Min/Max pm*	*Notes*
West Brom BS Fixed Rate Regular Saver (Adult)	4.10	£10 to £250	Minimum of 10 payments. Rate reduced to 0.5% for missed payments.
Teachers BS Regular Saver (Issue 4)	4.00	£10 to £250	Rate includes 2.40% bonus for a year.
Saffron BS 12 Month Fixed Rate Regular Saver (Issue 2)	4.00	£10 to £200
Norwich & Peterborough BS E-Regular Saver and Regular Saver	4.00	£1 to £250	Rate includes 2.15% bonus for a year. 1.50% loss of interest for missed payments and withdrawals.
Principality BS Regular Saver Bond Issue 11	4.00	£20 to £500

With these five accounts, pay in a fixed monthly amount for 12 months in a row and your cash will earn between 4% and 4.1% in that year before tax. Of course, as you pay these sums in monthly, the total interest paid will be about half the headline interest rate, or around 2% on the total amount paid in during the year.

Spice up your interest rate

Finally, if you're after really high rates on your money, then consider becoming a social/peer-to-peer lender via leading lending exchange Zopa. With Zopa, you lend out your money to a wide range of people, who pay you interest instead of enriching bank shareholders.

In effect, Zopa matches up individual lenders with borrowers, cutting out banks and other lenders. Every borrower is been credit checked by Zopa, and loans to the highest-rated A* borrowers earn representative rates of around 7.6% APR.

I was a Zopa lender for three years and, during over this period, I got back every penny I'd lent, plus more than 6% a year in interest. Hence, based on my personal experience, I'd certainly recommend Zopa to savers looking to spice up their interest rates!

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