Cash is back! How can you get the most from your savings as interest rates continue to rise?

Interest rates have rapidly increased since the start of the year, with the most notable indicator being the base rate which has increased from 0.10% to 3% since December 2021. These rate increases have fed into the rates available to all types of savers and yet billions of pounds remain in low interest-rate current accounts.

Don’t rely on just comparison websites alone

With so many different banks and building societies offering products – each with its own unique terms and conditions - it can be quite challenging to know the best home for your hard-earned cash.

There are 321 banks authorised to accept deposits in the UK and 43 building societies, however these won’t all appear on a comparison website. These numbers continue to grow as new specialist lenders enter the market with the most recent entrant being Middlesbrough-based GB Bank, which is focussed on property development finance. Such banks may be unknown names to you, but typically they offer the best rates in the market. It’s also worth noting the Financial Services Compensation Scheme which protects eligible deposits up to £85,000 per person or entity per banking licence. This can help you to manage your risk by keeping within the protection limits but earning much higher returns too.

Cash can be used for much more than emergencies

Often savers have rainy-day savings. These savings pots tend to have an unknown timeframe attached to them. It can help you balance your return with layered terms to ensure you can access your money as and when you foresee you’ll need to. For other savers, there may be pre-defined reasons that you are keeping a cash buffer, including for example:

• paying a tax bill,
• holding cash in a pension
• purchasing a property
• making an investment
• trustees and charities needing readily accessible money

The rates are starting to settle at their new norm. For individuals, rates are at 3% on Instant Access, 4.36% on 1-year fixed terms and are just shy of 5% on 5-year fixed terms. Businesses and charities can earn up to 2.36% on Instant Access, 4.31% on a 1-year fixed term and 4.9% on a 5-year fixed term. The returns from shopping around have never been greater.

Reviewing all options for your savings

At Armstrong Watson we work in close partnership with the UK’s leading cash management provider and in doing so, we can provide access to the widest range of savings products on offer from Instant Access through to 5 years, providing solutions for all types of savers including individuals, directors, trustees and pension holders too. This means we can help generate the highest returns possible, as well as the greatest level of diversification for peace of mind.

Our Financial Planning Consultants will work closely with you to identify your cash needs and we’ll assist in opening your new savings accounts. This will involve us submitting applications to your chosen providers and providing you with the instructions you need to transfer your money into your new accounts. Your money will remain under your sole instruction at all times, and you’ll have direct legal relationships with each provider, meaning there are no hidden charges or middle-men involved.

*Rates correct December 2022