Martin Lewis warns anyone with a savings account to check it immediately
Martin Lewis has warned anyone with a savings account to check it immediately.
Speaking on ITV’s Money Show, the consumer expert warned now is the time to review any rainy day pot, because Online mirror reports.
The money-saving expert says fluctuating interest rates are the reason to check your accounts and gives his recommendations on what to do.
Read more advice from Martin Lewis here.
Martin Lewis told ITV viewers: “Top savings rates have changed a lot recently, they’ve gone up a lot but they’re still not in top form.
“In March, the best easy-to-access account was paying 0.4% now its 0.67% – that’s the same interest but more than half more.
“The best two-year fix was only 0.74%, now it’s paying 1.76%, so that’s more than double what he paid,” he explained.
“The reason some of these rates have gone up is that the long-term interest rate forecast has gone up and that’s what they’re pegged on.”
The consumer expert told viewers that despite the increase, the rates are not even at the level of inflation.
He said: “What’s more interesting is that fixed rates are now massively more competitive than easy access accounts were earlier in the year.
“The problem with all of this, however, is that none of these rates are even close to inflation. That means savings accounts are still ‘losing accounts’, but you still want the best rate possible. because it mitigates the rise in prices.
“If you have savings, go and find out what interest rate you’re paying and then compare it to the rates below.”
Now you can get all the essential news straight to your inbox by signing up to our free WalesOnline newsletter.
Signing up only takes a few seconds – just click here, enter your email address and follow the instructions.
All of these accounts have full FSC savings protection of £85,000.
For low-income people, Martin currently recommends the following accounts:
Help to save
Help to Save is a government savings account available to low-income workers applying for tax credits and Universal Credit.
If you qualify, you’ll get an extra 50p for every £1 saved, meaning that over four years, a maximum savings of £2,400 would result in an overall bonus of £1,200.
You’re free to pay as much as you want (up to £50 a month) so even if you part with £5 a month (£1.25 a week) – over two years you’ll get a £60 bonus £ taking your total pot to £180. Over four years, that would come to £360.
The scheme, which is designed to be “flexible and safe”, also hopes to get people into a habit of saving.
How much is saved and when is up to the account holder, and they don’t need to pay every month to get a bonus.
ISA for life
If you’re between 18 and 39, you can contribute up to £4,000 a year into a Lifetime ISA on a schedule of your choice, with a 25% bonus paid out after 12 months.
Over the life of an account, you can get up to £32,000 in cash from the government, provided you pocket the £1,000 bonus each year.
Interestingly, LISAs allow you to invest in the stock market or in cash. You can then use the money to buy a house or save for your retirement.
With a LISA you can currently buy homes up to £450,000 in London and £250,000 outside London.
However, if you choose to withdraw the money, you may face a penalty of 25% of the amount withdrawn.
Lifetime Isa’s top cash is currently Moneybox earning 0.6%.
If two early buyers plan to step up the ladder, you can open one each and double the savings.
But Martin warns, “Pay off expensive debt before you save, because the interest you’re charged on loans is far more than you’ll earn in savings.
What about top accounts for everyone else?
The best savings accounts today are fixed rate savings accounts.
Martin explains, “But with fixed rate savings, you lock in your money, so you have to be aware of that.”
Here are his top picks:
Main 1-year fixed accounts:
Standard Savings – Zopa, 1.35% (minimum £1,000)
Cash ISA – Hampshire Trust, 0.95% (minimum £1) – can withdraw but there is a 90 day penalty.
Main 2-year fixed accounts
Standard Savings – SmartSave, 1.6% (minimum £10,000)
Cash ISA – Close Brothers, 1.2% (minimum £10,000) – can withdraw but there is a 150 day penalty.
Fixed Sharia accounts:
Al Rayan, 1 year, 1.45% (minimum £5,000), 2 years pays 1.76%
Martin adds, “With a five-year fixed rate, you can get over 2%, but with the expectation that interest rates might go up, if interest rates go up in a few years, you might find that you’re losing .”
The best accounts if you need flexibility
The best easy-to-access savings accounts – meaning you can withdraw money whenever you want:
Shawbrook – 1.67% (minimum £1,000)
Cynergy – 0.66% (minimum £1)
Marcus – 0.6% (minimum £1)
Higher notice accounts – you can withdraw if you give notice:
Secure Trust – 1.1% – 120 days notice or 0.85% for 60 days notice (minimum £1,000)
Main current accounts:
Virgin – 2.% (up to £1,000)
Nationwide FlexDirect, 1 year 2% correction (up to £1,500)
Top regular savers:
Natwest and RBS 3% (max £50 per month)
To receive news directly in your inbox, subscribe to our newsletters.