If your money's in places paying pitiful interest, here's how to bring it back to life.
Are you a victim of zombies? Or, more specifically, is your money? You could well be, as it’s estimated 80% of savings accounts are ‘zombies’, thanks to their pitiful interest rates and the fact they’re shut to customers.
These lifeless accounts pay as little as 0.1% interest. And, more worryingly, nearly eight out of ten of us (79%) don’t check what return we’re getting from our savings, according to peer-to-peer website RateSetter, which collated these scary stats. So it seems many of us are zombies too, at least when it comes to our savings…
Fortunately, there are some very easy ways to defeat this particular zombie threat…
Find out where your savings are
[SPOTLIGHT]Do you know where your money is stashed away? If not, it’s time to find out. Once you’ve done that, check what interest rate(s) is being paid. You might get a fright…
Save your savings
There are hundreds of savings accounts and Cash ISAs out there, but less than a hundred beat the current inflation rate of 2%, according to financial data provider Moneyfacts.
If yours is one of them and you can access your money without incurring a penalty, it’s time to embark on a rescue mission.
Where you put them next is very much down to your attitude to risk, and how readily you need access to your readies.
Here is a snapshot of the latest top rates across savings accounts, Cash ISAs and current accounts.
|
Account |
Type |
Gross interest rate |
Net interest rate for basic rate taxpayer |
Net interest rate for higher rate taxpayer |
Minimum deposit |
|
Five-year peer-to-peer savings |
5.60% |
4.48% |
3.36% |
£20 |
|
|
Zopa* |
Five-year peer-to-peer savings |
5.00% (guaranteed rate) |
4.00% |
3.00% |
£10 |
|
Current account |
5.00% (one year only) |
4.00% |
3.00% |
£1 |
|
|
Clydesdale Bank Current Account Direct |
Current account |
4.00% (until March 2015) |
3.20% |
2.40% |
£1 |
|
Yorkshire Bank Current Account Direct |
Current account |
4.00% (until March 2015) |
3.20% |
2.40% |
£1 |
|
Secure Trust Bank Fixed Rate Bond |
Seven-year fixed rate bond |
3.52% (until 31st December 2020) |
2.82% |
2.11% |
£1,000 |
|
FirstSave Five-Year Bond |
Five-year fixed rate bond |
3.25% |
2.60% |
1.95% |
£1,000 |
|
Leeds BS Fixed Rate ISA |
Five-year fixed rate Cash ISA |
3.05% |
3.05% |
3.05% |
£1 |
|
Current account |
3.00% |
2.40% |
1.80% |
£3,000 |
|
|
Bank of Scotland Classic Account with Vantage |
Current account |
3.00% |
2.40% |
1.80% |
£3,000 |
|
Lloyds Bank Classic Account with Vantage |
Current account |
3.00% |
2.40% |
1.80% |
£3,000 |
|
TSB Classic Account with Enhance |
Current account |
3.00% |
2.40% |
1.80% |
£3,000 |
|
Four-year fixed rate bond |
2.91% |
2.33% |
1.75% |
£1,000 |
|
|
Coventry BS Fixed Rate ISA |
Three-and-a-half-year fixed rate Cash ISA |
2.75% |
2.75% |
2.75% |
£5,760 |
|
Bank of London and the Middle East Sharia-compliant Fixed Term Deposit** |
Three-year fixed rate bond |
2.60% |
2.08% |
1.56% |
£25,000 |
|
Bank of London and the Middle East Sharia-compliant Fixed Term Deposit** |
Two-year fixed rate bond |
2.50% |
2.00% |
1.50% |
£25,000 |
|
Virgin Money Fixed Rate Cash E-ISA |
Three-year fixed rate Cash ISA |
2.40% |
2.40% |
2.40% |
£1 |
|
Post Office Fixed Rate Cash ISA |
Two-year fixed rate Cash ISA |
2.25% |
2.25% |
2.25% |
£500 |
|
Nottingham BS eSaver Fixed |
18-month fixed rate bond |
2.05% |
1.64% |
1.23% |
£1,000 |
|
Islamic Bank of Britain Sharia-Compliant Fixed Term Deposit**/United National Bank Fixed Term Deposit |
One-year fixed rate bond |
1.90% |
1.52% |
1.14% |
£1,000/£2,000 |
|
Britannia Fixed Rate Cash ISA |
One-year fixed rate Cash ISA |
1.85% |
1.85% |
1.85% |
£5,760 |
|
Islamic Bank of Britain Sharia-Compliant 120-Day Notice ISA** |
Notice ISA |
1.81% |
1.81% |
1.81% |
£250 |
|
Islamic Bank of Britain Sharia-Compliant 120-Day Notice Account** |
Notice savings account |
1.81% |
1.45% |
1.09% |
£250 |
|
Stafford Building Society/Britannia Select Access |
Instant access ISA |
1.75% |
1.75% |
1.75% |
£1/£500 |
|
Kent Reliance BS Easy Access Savings |
Instant access savings account |
1.60% |
1.28% |
0.96% |
£1,000 |
*Not protected by the Financial Services Compensation Scheme
**Anticipated profit rate
As you can see, there’s a big drop from the three at the top of the table. Two of these companies, RateSetter and Zopa, are peer-to-peer companies. They act as middlemen to allow ordinary savers to lend to ordinary borrowers. In return, they offer better returns than on the high street. There are also other peer-to-peer companies, such as Funding Circle, offering the option of lending to small businesses.
However, it’s important to note that these accounts are not protected by the Financial Services Compensation Scheme, which guarantees the first £85,000 you have deposited with an institution should it go under. You’ll also need to lock your money away for the best returns.
You’ll also notice that there are several current accounts paying better rates than the top easy access savings accounts. These are well worth considering, particularly if you prefer your cash to be in a low-risk place.
Keep guard
Once you’ve moved your money, make sure you don’t fall victims to the zombies again. Keep an eye on your interest rate to see if you could earn more elsewhere. Our article Where to earn most interest on your cash can help protect you.
Good luck out there...
More on savings:
The best instant-access savings rates