How to get your finances back on a roll

INFLATION is on the rise, yet savings rates remain stubbornly low. So it is more important than ever to find the best possible rates for your cash.

Anna Bowes, director of the website Savings Champion, says: ‘Never just accept what your bank is offering. You will almost certainly do far better if you shop around to seek out top rates.’

Savers who have been with the same provider or in the same account for many years are likely to be among those who are losing out. Savings rates have fallen over the past 12 months, so Bowes says it is possible that your bank or building society has taken a knife to the rate on your account without you noticing. The difference between the best and worst cash savings accounts is stark.

HSBC’s Flexible Saver account pays just 0.01 per cent – that is £1 a year for every £10,000 held on deposit. By contrast, one of the best easy access accounts is an online savings deal with the Post Office. It is paying 1.01 per cent, which would earn you £101 a year on a £10,000 deposit. But you will need to move your money after 12 months, as the rate includes a 0.76 per cent bonus, which falls to zero after the first year.

Fixed-rate bonds offer better rates than instant access and easy access accounts and protect you from further rate cuts. But remember that with a bond you will be unable to access the money until it matures without incurring a penalty – and the rate could look uncompetitive if rates start rising.

The best deals are usually online. For example, digital provider Atom Bank is paying 2.05 per cent, fixed for five years. This bond can only be operated through a mobile phone app, so is no good if you do not own a smartphone. If that is the case, consider Skipton Building Society, which is paying 2 per cent fixed for five years on its online bond.

Regular savings accounts are good if you want to put a sum away each month. Saffron Building Society pays 3.5 per cent on its 12-month branch and postal regular saver account, while Santander 123 current account holders can get 3 per cent on its regular saver account. The maximum contribution is £200 a month on both accounts.

TOP TIPS

KEEP a healthy sum in an easyaccess account to cover unforeseen events and emergencies. Aim for between three and six months’ wages.

MONITOR the rate on your accounts at least twice a year. Switch if it is no longer competitive. Savings Champion offers a free rate tracker service that lets you know when the rate on your account changes and if you can find a better deal.

LOOK at high interest current accounts. Nationwide Building Society’s FlexDirect pays 5 per cent on balances of up to £2,500, falling to 1 per cent after 12 months.

ENSURE your savings portfolio is balanced. By including a mix of easy access accounts and fixed-rate bonds, you can take advantage of any better rates that come along in the meantime.

REMEMBER that the maximum protection on deposits is now £85,000 – or £170,000 for a joint account – per provider. You may hold accounts with different savings brands that are part of the same banking group, so be sure not to exceed the limit. The Financial Services Compensation Scheme has more details at fscs.org.uk.

IF YOU lose track of an account, visit mylostaccount.org.uk, a free tracing service run by the Building Societies Association, the British Bankers’ Association and National Savings and Investments. MANY people have amassed a portfolio of tax-friendly Individual Savings Accounts (Isas), investments and pension funds during their working life. But few take time to review whether their investments are performing satisfactorily and if they could get better value for money elsewhere.

Danny Cox, a financial adviser with broker Hargreaves Lansdown, says: ‘We all have busy lives and it is all too easy to forget about old pensions and investments we may have taken out years ago. As a rule of thumb, I recommend that clients check their investments about once a year. They should look at the individual funds they own and see whether they are on track.

‘If your objectives have changed – for example, you plan to work longer or retire earlier than expected – then ensure your investments will still help

you meet your new goals. It may be that some tweaking is required. If in doubt, it may be time to seek some advice from a fee-charging investment adviser or a financial plan-ner.’

DO NOT forget to use your tax-free Isa allowance each year. The individual tax-free limit for this financial year, which ends on April 5, is £15,240. The allowance for the next tax year, starting on April 6, rises dramatically to £20,000.

CAUTIOUS and first-time investors should focus on funds that track a UK index such as the FTSE All-Share or FTSE100. The best place to buy such tracker funds is through a low-cost online investment platform run by the likes of Fidelity or Hargreaves Lansdown.

IF YOU have an appetite for greater risk and are investing for the long term, then consider the actively managed funds that are run by leading investment houses.

DRIP feeding cash into a fund each month is a good way to benefit from stock market gains and limit the effect of falls.

THE unclaimed assets register can help you track down lost investments. Visit uar.co.uk or call 0333 000 0182.

TO TRACE lost private and workplace pensions use the Pension Tracing Service. Visit pensiontracingservice.com or call 0800 1223 170.