Martin Lewis has shared the best ways to maximise savings through your bank account. The Money Saving Expert spoke on his podcast this week about the safe way for your money to make money, having spoken about the inherently risky investment last week.
He said there are two routes to savings: Putting money into a savings account with reliable interest and forgetting about it, or managing it across different accounts to maximise interest.
Lewis’ first suggestion is fixed-term savings accounts. With these, you can’t usually withdraw your money until the end of the term (between six months and five years), but the interest rate is guaranteed. Next is easy-access cash ISAs, which let you take out your money when you want, without penalty. These are a good option if you know you’ll be dipping into your savings, or you’re not sure.
If you’d rather a guaranteed interest rate, you may need to sacrifice flexibility and lock money in a Fixed cash ISA. Cash ISAs differ from standard savings accounts as the rates are variable, money must be transferred between providers, and not all are flexible.
Lewis also spoke about regular savings accounts. These offer higher rates than cash ISAs, but you can generally only save a little each month (up to £250 is common), and you usually can’t withdraw money until the end of the term.
He said they’re a good way to save if you’re putting something aside each month, or if you want to drip-feed cash from other savings accounts. First Direct, Santander, Nationwide, NatWest, and TSB are big names in this space.
The Money Saving Expert suggested notice accounts. With these, you need to give notice before you can withdraw your cash. They’re good for those who can’t lock money away with no access, but also know they’ll be able to wait to access it when they need it.
With a lifetime ISA, you can save up to £4,000 every tax year towards a first home or your retirement, with the state adding a 25% bonus (max £1,000/year) on top of what you save.
There is also premium bonds, where money can be withdrawn at any time, but keeping it in could mean winning up to £1 million. The odds of winning this much are one in 2.6 billion. Winning £25 is one in 880.
