Higher Interest Rates – Interesting for Savers?
As an accountant, we are not regulated to give financial advice, such as specifics of when and how to invest, and we would always suggest speaking to a financial adviser. However, below I have included some top tips from my own general experience to consider when thinking about maximising your interest returns. These are all general points, and you will need to explore your specific situation before acting upon these and we would recommend speaking with a professional.
- Renew your products: Often banks release new savings accounts periodically, and you may find that you need to upgrade your existing account or open a new savings account with the bank to take advantage of the terms that come with these new accounts. An account can quite quickly become outdated, but without actively managing this you can be left with these outdated terms. This can usually all be done quite simply online. Of course, you must check if the new account has more favourable terms than the old one.
- Explore different banks: One of the main reasons banks have not needed to pass on interest payments quickly is that the vast majority of people are very loyal to their bank and do not want the hassle of changing. Often, better rates are available at other banks, often challenger banks outside of the main high street names. However, always of course undertake your due diligence to make sure the bank you are considering is a safe place for your money.
- ISA v Standard savings accounts: Historically cash ISAs offered tax-free savings which attracted people, but given low interest rates and the fact that basic rate taxpayers had a Personal Savings Allowance (PSA) of £1,000 per annum then the majority of people would not have paid tax on savings anyway and hence the comparative interest rate was more important than the fact that an account was an ISA. However, with interest rates increasing, more people may start exceeding the PSA and hence ISAs do form part of an important consideration again. Banks no longer pay interest after deducting 20% tax like they did in the past, so people with bigger interest income may find themselves with tax liabilities going forward.
- Overall management by a professional: I wouldn’t dream of advising on a general basis whether people should invest in cash, in pensions, in properties, in stocks and shares, or in any other form. However, clearly, an important consideration everyone must make on an individual basis is whether saving money in the bank is the right thing to do. Speak to a professional to make sure your investments are set at the right risk profile and align with your individual goals, which will differ depending on your personality, level of wealth, age, and family situation.
In conclusion, understand any rates of interest on your current and savings accounts and consider exploring ways of improving on this whilst weighing this against the time and effort spent doing it. And for the fourth time this article, please do speak to a professional!
Disclaimer. This article has been prepared for information purposes only. Formal professional advice is strongly recommended before making decisions on the topics discussed in this release. No responsibility for any loss to any person acting, or not acting, as a result of this release can be accepted by us, or any person affiliated with us.