Get into the savings habit in 2013

Published:
27 December 2012
Topic:
News,Money,ISA,Savings

Are you surprised how quickly 2012 went? Well, the chances are 2013 is going to do just the same, so if you've been putting off starting the savings habit, don't delay any longer.

With so many pressures on our time, sorting out your savings can end up at the bottom of the 'to do' list. But every day you put it off, the less you will end up with when you really need it.

It doesn't matter if you can only afford to put a few pounds away each month. There are lots of deals out there to suit every pocket. Here's our rundown of some of the best...

Easy access accounts

If you want to build up some savings that will be readily accessible in the event of an emergency, then an easy access account is likely to be your best bet. And the good news is, even the market-leading deals only require a minimum investment of £1.

Marks & Spencer's Everyday Savings account, for example, which can be opened with £1, pays a best buy annual equivalent rate (AER) of 2.35%, although this includes a 1.00% bonus which is only payable for the first year, so you may want to move your money once this disappears. The account can be operated online as well as by phone.

Other options include ING Direct's Savings Account, which pays 2.00% AER and can be opened with £1. This rate includes a 1.48% fixed bonus in the rate for the first year.

Savers who would prefer a 'clean account' without any bonus included in the rate, may want to consider Scottish Widows Bank Direct Transfer Account 2, which pays 1.70% AER on a higher minimum investment of £1,000.

 

Lock into a fixed account for higher returns

If your biggest worry is that savings rates could plummet further, you may want to save into a fixed rate bond, which, as the name suggests, give peace of mind that rates won't change for the term of the account.

Vanquis Bank's High Yield Bond may not live entirely up to its name - but it does pay a respectable annual equivalent rate (AER) of 3.01% to savers who can afford to tie up their money for this length of time. You will need a £1,000 minimum deposit to apply and the account can only be operated online.

However, in five years' time, this rate may look particularly low. So, if you are after a shorter-term bond, The State Bank of India is paying an AER of 2.75% on its Hi Return Fixed Deposit 2 Year Fixed Rate Bond for a minimum investment of £1,000. The bank falls under the Financial Services Compensation Scheme (FSCS), which protects the first £85,000 of your savings, but you will need an existing savings or current account with the bank, holding at least £500, to qualify.

Alternatively, Bank of Baroda's MAX 1 Year Fixed Rate Bond, which is exclusive to MoneySupermarket customers, pays 2.30% AER for example, and can be opened with a minimum investment of £500.

Regular savings

If you'd rather pay a small amount into a savings account each month rather than deposit a lump sum, a regular savings account could be the ideal choice for you.

West Bromwich Building Society's Fixed Rate Regular Saver account, for example, pays 4.10% AER on a minimum monthly investment of between £10 and £250. You can miss up to two monthly payments in the 12-month fixed rate term, but no withdrawals are permitted.

Barclays Monthly Savings account, meanwhile, pays 3.25% AER on monthly payments between £20 and £250. You earn a lower rate of 3.03% for months when you make a any withdrawal during the 12-month fixed rate term.

However, the best regular savings rate currently available is from First Direct. If you are a First Direct 1st account customer, then you can earn a whopping 8.00% AER from the bank's Regular Saver accounts. You must pay in between £25 and £300 a month into this account.

ISAs

Savers who have yet to make the most of this year's £5,640 cash ISA allowance need to get their skates on, as if you haven't invested before the end of the tax year on April 5, your 2012/13 allowance will be lost for good.

Coventry Building Society's 60-day Notice ISA is currently the market-leading variable rate ISA, paying a table-topping 3.10% tax-free on a minimum investment of £1. The rate includes a bonus of 0.60% for the first 12 months, and the account does not accept transfers from existing ISAs. This account can be operated online, by post or telephone or in branches.

Marks & Spencer's Advantage cash ISA is also well worth a look, paying 2.75% tax-free on a minimum lump sum investment of £100 or a direct debit of £25 a month, and can be operated online and by telephone. The rate on this account will fall to 2.25% tax-free for new and existing account holders from March 6, 2013.

Alternatively, Teachers Building Society's Cash ISA Reward (issue 2) pays 2.65% tax-free on a minimum investment of £100, with a bonus of 0.90% included in this rate. The bonus is only payable for the first year, so you may want to move your money once it goes.

ING Direct's Cash ISA, meanwhile, pays 2.25% tax-free on a minimum investment of £1, and can be operated online and by telephone. The rate on this account is guaranteed for 12 months, so you may want to move your money at the end of this period.

Finally...

Whichever account you go for, make it a New Year's Resolution next year to keep a close eye on what is happening to savings rates and to move your money if it could be doing better elsewhere.

Kevin Mountford, head of banking at MoneySupermarket, said: "At a time when finances are tight, consumers need to make every penny count and ensure they get as much bang for their buck as possible. This means regularly checking their rates to ensure their money is working as hard for them as possible and scouring the market to check their products stack up against other providers."

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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Melanie Wright

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Financial journalist

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