The past few years have been appalling for savers with pitiful interest rates offered on standard savings accounts. Now the uncertainty over Brexit has led to many experts saying the Bank of England won’t raise savings rates until 2020 at the earliest and the next move could even be lower.
Recently the Financial Conduct Authority named and shamed 32 banks and building societies that are paying customers as little as 0.1% interest on their savings. This is often on accounts that offered a competitive headline rate, but after a period of time the rate is cut to next to nothing. There are a lot of accounts out there that are paying you virtually no interest at all, but that doesn’t mean you have to settle for meagre returns on your savings. There are a number of ways you can vastly increase your interest rate.
The first thing to do is check all your savings accounts, and find out exactly what interest rate you are getting, and if there is any penalty for moving your savings elsewhere. Anyone with an ISA that is paying a poor rate should look at transferring to a new ISA with a better rate of interest. You could also move your money into a stocks and shares ISA and invest in shares, bonds, or funds.
Alternatively, you could transfer some of your ISA savings into an Innovative Finance ISA. These allow you to invest your money into peer-to-peer lending, which offers far higher interest rates. There is more risk here, your money is being lent to individuals who could fail to repay, but as yet no-one in the UK has lost money in peer-to-peer and it has been running for over a decade. Also, your money isn’t covered by the Financial Services Compensation Scheme, so if the peer-to-peer lender went bust you could lose your cash.
If you are not sure where is best to invest your savings, then contact one of our Independent Financial Advisers to discuss your options.