5 ways 2015 will be better for savers

If you’re a saver, chances are you won’t be sorry to see the back of 2014.

Rock bottom interest rates, coupled with many banks and building societies slashing already low returns, mean it’s been an ‘annus horribilis’ for savers.

But the good news is 2015 looks set to be a better year if you’re trying to build a savings nest egg.
Here are 5 ways the New Year could mean a new start for your savings.

1. Recently-boosted ISA allowances go up even more

Tax-free ISAs have already seen a big boost after the Chancellor revamped the rules in his March 2014 Budget.

The changes mean that ever since July 1, 2014, you can pay up to £15,000 into new ISAs (NISAs).

You can also put your full allowance into cash if you want to.

Previously you could only put £11,880 into ISAs, and only half of this (£5,940) could be held in cash.

From April 6 2015, the start of the new tax year, the limit increases again, so you’ll be able to stash up to £15,240 into ISAs.

2. New Pensioner Bonds launch

If you’re a ‘silver saver’ aged 65 or over, you’ll be able to take advantage of the market-leading rates offered by NS&I’s new Pensioner Bonds (read our Q&A on then here).

The bonds will probably go on sale in mid-January but the government hasn’t confirmed exactly when yet.

They pay a leading 2.8% before tax if you tie up your cash for a year, rising to an also leading 4% if you go for the three-year bond.

You can save a minimum of £500 and a maximum of £10,000 in each bond.

You’ll need to hurry though. The bonds are only going to be around for a limited time, so don’t hang about if you’re considering investing.

3. Higher limits for Premium Bonds

If you fancy a flutter, but don’t want to risk your savings, Premium Bonds offer you the chance to scoop one of two £1m jackpots every month.

Since June 1, 2014, you’ve been able to put up to £40,000 into Premium Bonds – up from £30,000.

But in 2015, the maximum amount you can invest in Premium Bonds rises to £50,000. The exact date when this will happen has yet to be confirmed.

Returns are tax-free - although of course there is no guarantee you’ll win anything.

The odds of each £1 bond winning a prize in each monthly draw is 26,000 to one.

Currently, the premium bond prize-fund rate is equivalent to an interest rate of 1.35% a year.

What this means is that if you held every single premium bond there is, your winnings would probably work out at about 1.35% of the amount you invested.

4. Peer-to-peer lending to be included in ISAs

If you want higher returns than savings accounts can offer, peer-to-peer lending is well worth a look.

It works by connecting you with people who want to borrow your money.

They then pay you higher rates than you can typically achieve from a bank or building society savings account.

The government launched a consultation on how best to include peer-to-peer lending in ISAs in October, so returns could soon be tax-free.

The consultation closed in December, so keep your eyes peeled for an announcement in the New Year.

5. Savings rates might increase

No-one knows for certain when the Bank of England will finally raise interest rates, currently still down at 0.5%.

But as our article ‘When will interest rates rise?’ shows, plenty of experts are predicting rates will go up in 2015.

If they do rise, then you should see providers raise savings rates.

You’ll need to be savvy though, as not all will pass on any rate rises in full.

So if your savings accounts are not paying you higher returns once interest rates increase, vote with your feet and move elsewhere.

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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