Banks and building societies are competing with higher interest rates in the wake of interest rate hikes by the Bank of England.
While this was a blow to many mortgage borrowers, it also led to more competitive savings rates in the market. Here are some top tips from Which on the best savings accounts and other ways to get the most out of your bank account.
1. Find the best savings account for you
There are several ways to save your money, including regular savings accounts, instant access savings accounts and fixed-rate bonds. When choosing, consider how often you plan to deposit and withdraw savings.
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Which? found that the best interest rate for instant access savings accounts with no restrictions is currently 3.15% AER (Annual Equivalent Rate) offered by Chip. However, you can find higher rates on a fixed rate account, for example: The best interest rate for a two-year account is 4.47% EPR (Expected Profit Rate) offered by Al Rayan Bank (rates valid from February 23, 2023).
2. Use switching offers
If you’re already thinking about switching banks, it’s worth checking what incentives are on offer first. Switching to a new provider takes just seven working days and can often earn you a cash bonus.
For example, NatWest recently introduced its highest switching incentive yet for new and existing customers switching to its current accounts. Those thinking about switching to NatWest Select and Reward current accounts can claim £200 to make the switch. You can also get £200 if you switch to a TSB Spend and Save account or Spend and Save Plus using the Current Account Switch Service (CASS) by 24 March.
Be sure to read the fine print in the terms and conditions when you are considering switching to a new account.
3. Flat-rate bank account benefits
Package accounts offer benefits such as travel insurance, roadside assistance or cell phone insurance for a monthly fee. Package accounts can be a cheaper and more convenient way to get covered, but read the terms carefully.
Keep in mind that these accounts are only worth it if you make the most of the benefits and services you pay for.
4. Earn rewards and cashback through your account
Cashback can help you save money on your spending. Many banks and building societies offer cashback on monthly bills and loyalty rewards as an incentive for opening or maintaining an account.
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Some pay as little as £20 a month. The Santander 123 account is highly rated by Which? and pays up to 3% cashback on selected household bills, capped at £5 per cashback tier per month – but there is also a £4 monthly fee.
5. Check the overdraft fees on your bank account
Going overdraft can be costly, especially as some accounts charge an APR of up to 39.9%. If your bank charges a high interest rate, it might be worth checking whether you can switch to an account with a lower interest rate – especially if you regularly overdraw. Nationwide currently offers a free authorised overdraft on its FlexDirect account, but this is only valid for the first year.
Warning: The age-old complaint about savings interest is more likely to be your fault than that of the bank bosses
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