Credit crunch has one saving grace
If you are lucky enough to have some spare money, now could be the time to cash-in...
The credit crunch has not been bad news for everyone. Those with money in the bank have enjoyed soaring savings rates. Banks have been trying to repair balance sheets, and one of the easiest ways of doing this is to attract in more cash by offering savers market-busting interest rates.
Kevin Mountford, head of savings at moneysupermarket.com, believes many people have been nursing losses from the stock market collapse, but savers are having the last laugh.
“As long as banks and building societies are keen to attract savers, interest rates will stay high – it’s that simple,” he explained.
Fixed-rate savings bonds pay the best rates. Several pay more than seven per cent, even though base rates have been stuck at five per cent for months.
Indian-owned ICICI Bank UK pays 7.2 per cent on its HiSave Fixed Rate. You need to save £1,000 or more and will not have access to it for a year.
West Bromwich Building Society’s Stratus Notice Account is currently paying a variable rate of 6.45 per cent
on balances of £1,000 or above, while Anglo Irish Bank is paying 6.4 per cent on in its Easy Access Deposit Issue 2 account (minimum deposit: £1). Both rates are still well above the current five per cent Bank of England base rate.
If you are a UK taxpayer, use your annual £3,600 cash Isa allowance that allows you to take your interest free of income tax.
Barclays Bank’s Tax Haven Isa pays a variable 6.08 per cent on £1 and above, although this figure is inflated by a
one per cent bonus that only lasts 12 months.
Thanks to the Isa tax umbrella, that is worth 10.13 per cent to a top-rate taxpayer and 7.6 per cent to a basic
rate taxpayer.
So if you are lucky enough to have a bit of cash spare, shop around for the best deal.
And it will soon be Christmas, so try to put a little away every week in a market-leading instant access account for a few treats in the festive season.