We can all agree savings rates are terrible at the moment. But did you know that with a bit of imagination it’s possible to trump the rates offered on easy access accounts? What’s more, you don’t necessarily have to lock away cash.
Here’s everything you need to know to give your savings a much-needed boost (and potentially bag £50 cashback on top!).
How bad are easy access savings rates?
Right now, the top-rated easy access savings account pays 0.7% AER variable, via Cynergy Bank. While this is a pittance in historic terms, savings rates have been in the doldrums for a fair few years. In fact, 0.7% compares relatively well with other rates on offer. For the majority of 2021, the highest savings rates have stood at a smidgen above 0.5%.
However, despite this, there’s no denying that 0.7% is still way less than the current rate of inflation. As a result, many easy access savings accounts are commonly referred to as ‘losing accounts’. That’s because cash stored in these accounts is effectively losing its value over time.
While there’s no sure way to combat the forces of inflation, there are ways that you can boost your savings interest rate.
How can I boost the interest rate on my cash?
The easiest way to boost your savings interest rate is to lock away your money for a fixed period. These types of savings accounts are known as fixed-rate savings accounts, or fixed-rate bonds.
Generally, the longer the fixed term, the higher the interest rate. Right now, you can bag 1.36% AER fixed for one year through Investec, or 1.61% AER fixed for two years via Zopa.
If you’re happy to lock away your money for longer, then SmartSave Bank pays 1.83% AER fixed for three years, while Secure Trust Bank pays 2.05% AER fixed for five years.
While fixed savings accounts are a popular way of beating easy access, remember that with these accounts your money is locked away for the fixed term. This can be a real problem if interest rates rise in future, as you wouldn’t benefit. In other words, the longer the fix, the bigger the risk you’re taking, so factor that in before opting for this kind of account.
For a full list of options, see our list of the top-rated fixed savings accounts. [middle_pitch]
How can I get £50 cashback on my savings?
Fixed savings accounts aren’t for everyone. This statement is especially true if you don’t want to lock away cash for a number of years.
Thankfully, there is one way of boosting your interest rate without having to lock away your cash for a long period of time.
Right now, Investec pays 0.8% AER variable with its 32-day notice account. This comfortably beats the 0.7% on offer with the current top easy access savings account. As an added boon, if you save over £10,000, you’ll be able to bag yourself £50 cashback on top. This applies if you’re new to savings marketplace ‘Raisin’.
To get the £50 cashback, you’ll need to sign up via this Raisin link and deposit between £10,000 and £85,000. You’ll then need to send an email with the title ‘Welcome bonus’ to ‘email@example.com’ within six months. Make sure you include your full name in the email. You should then get your £50 within 14 days.
While the Investec account isn’t a fixed savings account, you do have to give at least 32 days notice before making a withdrawal, so bear this in mind.
If you don’t mind locking away your money, then it’s worth knowing that the £50 Raisin cashback offer also applies to UBL Bank’s fixed-rate savings account. This account pays 2.05% AER fixed for five years, matching the market-leading rate offered by Secure Trust Bank.
However, be mindful that the £50 cashback offer only applies to new Raisin customers, so it’s not possible to bag the bonus on both accounts.
Are you looking for more options to stash your cash? See the list of our top-rated savings accounts.
The post How to beat easy access savings rates AND grab £50 cashback appeared first on The Motley Fool UK.
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