Martin Lewis – Saving

I love a good rant as much, if not more, than the next man. Yet it’s time to accept that spouting on about the dire, dismal, spit-worthy interest rates savers now earn does nowt. Instead, we must forget complaining and turn ourselves into active savers to maximise our earnings.

Check your savings account and cash ISAs now – many pay under 0.5%. Yet that’s easy to smash, and every account below is covered by the UK £85,000 per person, per financial institution savings safety guarantee. Here are my top 10 tips.

1. Make your bank account pay you up to 5%. A raft of bank accounts pay higher in-credit interest than top savings, with the aim of sucking people into switching. 123 is the prime one to look at. While others have higher rates than its 3%, this on a far larger amount of £3,000 to £20,000. This means it pays up to nearly £600 interest a year compared with the next biggest, Club Lloyds’ £200. While it does have a £2/mth fee, for most that’s easily covered as it pays cashback on direct debits such as mobiles, energy and water. This adds up, as Hannah tweeted me: “£260/yr cashback on mortgage, phones, TV.” If you’ve less to save, rates of up to 5% are available on smaller amounts. For a full list of which pays most for what see my guide. It’s worth noting though that to get one of these accounts, you usually need to pass a credit check and set up a few standing orders or direct debits. You must also meet the ‘min monthly deposit’ amount, which is how they ensure you pay your income in there.

2. Couples do it better together. If one of you pays tax at a higher rate than the other, provided you trust each other, put non-ISA savings in the lower taxpayer’s name and you’ll take home more. Plus when it comes to the high interest bank accounts, many allow you to open one each, plus a joint one. With Santander that means you could cover £60,000 – though you still need to meet all the conditions for each.

3. Grab a FREE £100 plus 6% interest or £5/mth. The other bank account savings route is accounts offering a free switching bribe, plus a linked high-rate savings product. These tend to beat the high interest bank accounts for those saving less than roughly £4,000. Top pick is, which has won every customer service poll I’ve done. It gives switchers £100, plus has a linked savings account paying 6%, which you can put £300 a month in. The Marks and Spencer bank account ( has a very similar set up. Alternatively, the Reward account gives £100 then pays £5 each month no matter how much or little you’ve got, unless you go overdrawn when it’s wiped. This alone beats the best interest after tax for those saving less than £1,500 in the top high-interest bank savings – never mind the free cash too.

4. Earn 2.3% and protect savings from tax. Cash ISAs are just savings accounts where you don’t pay tax on the interest. Every £100 earned in normal savings nets a basic-rate taxpayer £80, higher-rate £60. In a cash ISA you get £100. You can save up to £15,240 a year and once in, it’s tax-free year after year. The top-paying easy-access cash ISA, where you can take your cash out whenever you want, is the Direct Isa paying 1.5%. Yet if you are planning to put cash away, a good alternative is with a five year fix at 2.3%. Unlike normal fixed savings, you can access your cash early by closing the account. You will lose 120 days’ interest, but even so that means keep the cash in for a year and you’d effectively earn 1.54%

5. If you put cash aside every month, earn over 3%. Regular savings accounts often pay high interest on a small amount for a short time. The top regular savers are linked to current accounts (listed in point 3 above). Yet some decent deals are open to all, including Leeds BS 3.05% AER variable on £50 to £250 a month for a year.

6. Mix and match to maximise every penny. I’m often asked “What’s the best savings account?”. There’s no one right answer. It depends on how much you’re saving, how often, if you need access to it and more. Combining accounts often wins. The goal’s for every penny to flow where it earns most, such as putting a lump sum in a fixed-rate ISA and money you put aside each month in a top regular saver.

7. Lock your cash away to boost rates and earn up to 2.5%. Fixed-rate savings have two advantages: rates are usually higher and are guaranteed. Yet in return you forgo access to the cash for that time. Over one year, (min £500) is the winner at 1.9% AER, and for three years it’s (min £2,000) at 2.45% AER. Yet remember today’s interest rates are low – if rates do rise, you can’t ditch and switch.

8. Check your rates before you pooh-poohing 1.5% easy-access. While’s 1.5% easy-account account sounds awful (minimum £1,000), compared to what many accounts now pay, it’s quite decent.

9. Higher-rate taxpayers, don’t forget Premium Bonds. Premium Bonds are savings accounts where the interest earned is tax-free and based on a monthly prize draw. The currently published ‘prize rate’ is 1.35%. This describes the mean average, indicating that for every £100 paid into bonds, on average £1.35 a year’s paid out. In practice, this is impossible, as the smallest prize is £25. In fact if 20 people each had £100 in, for one to win £25-plus, the remaining 19 would have to win nowt. My lets you plug in how many bonds you have, and predicts your likely winnings. In a nutshell, they can give decent returns on average compared with normal savings for higher-rate taxpayers saving largeish sums over £10,000.

10. Earn less than £15,600? Your savings should be tax free. Next April the new personal savings allowance launches, allowing basic rate taxpayers to earn £1,000 a year interest tax-free (£500 for higher rate taxpayers). Yet this year a similar scheme started for those earning under £15,600. Here you get your normal £10,600 personal allowance – under which all income is tax free. Plus you can earn up to £5,000 a year from savings interest tax-free. Speak to your bank to ensure you’re not paying more tax than you need.