Cash advice

To get the most of your savings, you should aim to earn an interest rate that beats inflation (currently at 0.5%) – otherwise your money is losing value. Here’s what you need to know about saving money.

1 USE YOUR CURRENT ACCOUNT TO SAVE

Most of us use our current account to manage money on a day-to-day basis, but look closer and you’ll see these accounts do in fact offer competitive interest rates if you’re in credit and you deposit a certain amount in each month: Nationwide Flex

Direct – 2 per cent interest on balances up to £1,500 and 0.25 per cent on anything above that. You must deposit at least £1,000 into the account each month, which could be your salary. Virgin Money Current Account – 2.02 per cent on balances up to £1,000. TSB current account – you may be getting 1.5 per cent interest on balances up to £1,500 if you are depositing at least £750 a month, but the bank is dropping this in December to zero. It’s being replaced with a ‘spend and save’ feature which rounds up spending to the nearest pound and saves the difference.

2 SAVE FOR LONGER

If you’re happy to lock money away for at least 12 months, then here are some of the top savings rates: Atom Bank — which pays 1.11 per cent on balances between £50 to £100,000. You must keep your money in for at least 12 months. Aldermore – 1.10 per cent on balances between £1,000 and

£1m. You must leave it untouched for a fixed 12-month period. If you leave your money in for longer, then you can earn more interest with some accounts.

3 LINKED SAVINGS ACCOUNTS

If you just want to put away a small amount each month, then you may be able to take advantage of some top rates, depending on where you bank. Here are some linked saver accounts worth considering if you have current accounts with them. NatWest – recently launched a linked Digital Regular Saver account that pays a top rate of 3 per cent on balances up to £1,000. You have to save anything between £1-£50 each month to get it, by setting up a standing order via your NatWest current account. HSBC – a generous 2.75 per cent on balances up to £3,000. You must save £25- £250 a month via a standing order. First Direct – earn 2.75 per cent on balances up to £3,600 if you save £25-£300 per month. You have to save for at least 12 months to get the rate and if you save less than £300 a month, you can carry the allowance into the following year.

4 ISAs Anyone over age 16 gets an ISA allowance of £20,000 – these are savings accounts not subject to tax. You can get two types of ISA – a cash one where you earn interest or an investment one where your money is put to work in the stock market and could grow a lot more. If looking at cash ISAs, you can earn 1 per cent with Cynergy Bank or 0.91 per cent with Yorkshire Building Society. If you put your money in an investment account, you could earn as much as 8 per cent in return. If you invest, you must be willing to lock your money away for at least five years. The idea is the longer you invest, the more time your money has to grow, as well overcome dips in the stock market. Remember, investments can go down as well as up and you may get back less than you put in, although experts say, historically, investments do better than cash savings in the long term.

5 HELP TO SAVE We don’t hear about the government’s Help to Save scheme enough, but if you are entitled to Working Tax Credit or Universal Credit and on low income, then you could receive a bonus of 50p every time you save £1 over four years. The most you can pay into the account per month is £50. To find out more and to see if you are eligible, go to gov.uk.