While the Bank of England base rate remains a the lowest level ever recorded – at 0.5%, most savings accounts offered by banks and building societies pay derisory rates of interest.

At the end of 2009 the average branch based instant access savings account paid a measly 0.17%, which a notice account wasn’t paying much more than 0.33%.

However, if you look at the top 10 savings accounts in the Which4U comparison tables, you will notice that the best rates are offered on fixed rate bonds, so if you’re willing to lock your money away for a fixed period of time, you could be earning up to 4.75%.

How do they work?

A fixed rate savings bond is a bank account that allows you to earn high interest rates in return for agreeing to leave your money without making any withdrawals until the agreed term is reached.

Returns on the investment are limited to the interest paid on the account, which can be calculated before the bond is opened, providing a predictable income.

Fixed bonds differ from standard deposit accounts as the interest rate is guaranteed to remain the same throughout the fixed period. The terms differ, with rates to reflect the term, but they usually last from between 6 months and anything up to around five years.

The interest accumulated every year is added onto the balance and paid on maturity.

It is generally possible to access your funds in an emergency, but doing so would result in the account being charged with a loss of interest.

Banks and building societies offer more attractive rates of interest on this type of investment because it gives them the ability to gain access to secure long term deposits.

Currently, the best five year fixed rate bond pays a rate of 4.75% (Nationwide bond) per annum compared to the best instant access accounts offering 2.80% (Halifax).

You could argue that rates will change over the next 5 years, so you need to consider this when making a decision on the term, as you could find that you are earning less than the current instant access accounts are paying.

Should you consider them?

Savers should consider a number of factors before deciding whether they should invest into a bond and the term they choose.

When will you need the money?

Avoid being drawn in by an attractive rate without fist making sure that you can do without the money until the bond matures.

The cost of borrowing money is usually greater than the return you will get from the bond, so this is a no no.

Are interest rates likely to go up during the term?

This can be a difficult call. The answer is simple, people can make predictions to the direction of interest rates, but no one knows for sure.

But considering how long the Bank of England base rate has stayed at 0.5% (since March 2009) and the fact that some economists believe it will remain this low for another 12 months, savers can be more comfortable with getting good rates for just one or two years, giving them the flexibility to reinvest again in a few years time.

What do you give up to qualify for a better interest rate?

For the better return, savers do give something up – the access to their savings for a set period and access now to the interest earned.

So for savers who need an income now these products may not be suitable.

There is also the possibility of losing the chance to use the money more profitably, perhaps by investing in other assets such as equities, or paying off a mortgage.

Investment bonds

Investment bonds are fundamentally different and involve investment not saving.

The policies are typically sold by life assurance companies which allow you to invest in a variety of funds (either investment trusts or unit trusts) managed by professional investment managers.

Bonds are usually used for long term capital growth but can also be used as a means to generate income.

Investment bonds tend to invest in a wider range of assets than savings bonds, including UK and overseas equities, commercial property, fixed interest securities, and cash- like investments.

In most investment bonds, investors can choose the amount in which they wish to invest into and can change the weighting of their investments several times a year.

Taxation

For tax purposes, investment bonds act as life assurance policies, therefore subjecting them to tax on the returns gained.

More and more couples are entering the same vicious circle of mortgage. What once was a dream, soon after the wedding became a nightmare. I am pretty sure that you too recognize the situation as being a specific event in your life. Civilized people agree to live under the same roof, but when the time comes to set priorities, each defends his\her own ideas. At this point the two parties (future customer & bank representative) are ready to meet and close the deal.

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The new tax year is approaching, and with it comes a new top rate income tax, meaning that those fortunate enough to be earning over £150,000 will be required to pay 50% income tax on anything above this amount.

In addition, higher rate on dividends will move from 32.5% to 42.5% of the grossed up income (equivalent to 36.11% of the net dividend) for taxable income above £150,000.

As a result of the changes to become effective from 6 April, private banks and wealth managers have been advising those who will be affected to act now in order to protect their income. Many are taking steps to bring forward earnings to this tax year, or plan their finances in an attempt to lower the impact.

Below are some tips outlined by Which4U that higher earners should consider:

1. Make full use of all your tax allowances Many of us complain about how much tax we pay, but forget to take advantage of tax free breaks. The truth is, many of us could be missing a trick when it comes to tax relief.Always ensure you have used up your allowances by the end of every tax year. A popular tax free savings incentive is your first port of call, in the form of individual savings accounts (Isas), with an annual allowance of £10,200 (or £7,200 for those under 50 until April 6th), as well as tax-free National Savings & Investments products.No income tax is required to be paid for any interest or capital gains earned using Isas, so make sure you shop around to find the best Isa rates, or alternatively if you wish to invest in a stocks and shares Isa, do some research into the market.

   Transfer investments that provide an income to your spouse, if he or she does not work or has earnings that fall in a lower tax band. This now not only applies to spouses on the basic rate tax but also those paying 40%, if the other spouse currently earns above £150,000 per year.

2. Close your bank account According to advisers at Deloitte, those that have a savings account paying interest on an annual basis that is due to be paid after April, should consider closing the account before the new tax rules kick-in in, allowing the interest payment to be subject to a lower rate of income tax. After, you can simply open a new bank account.
3. Donate to charity in the new tax year After 6 April, high earners making donations using the Gift Aid scheme will qualify for higher tax relief, which means that more money will be given to the charity. However, you should think about the potential impact delaying your regular donations could have on the charity, especially in the current financial climate.
4. Accelerate your income Some employers have chosen to pay employees their salaries early to avoid the higher tax. Consider asking your employer if this is a possibility. This may be easier for those in entrepreneurial or family businesses.You can also make use of any share options you currently hold, as these attract income tax so you will pay the lower rate. Those already getting pension income are able to opt to receive annual payouts as a lump sum before the changeover date in April.
5. Add more to your pension fund in the new tax yearIt has become apparent that pensions are looking more of an unattractive option to higher earners, with tax relief cut to 20% on some contributions.However, if you do fall into this category, you may want to act fast. In the 2010/2011 tax year, those earning more than £150,000 will be eligible to put in at least £20,000 and up to £30,000 with 50% tax relief, before the new restrictions come into play in 2011.Advisers at Deloitte have suggested that people earning between £100,000 and £113,000 – who will effectively be paying 60% tax from April as a result of their personal allowance also being eroded – should also add to their pensions.
6. Consider venture capital trusts (VCTs) Although these start-up investment schemes can be quite risky, they are being labelled as an alternative to a pension fund for higher earners because contributions attract 30% tax on the way in.
7. Move your assets into an offshore bondOffshore bonds are investment bonds that are operated by life insurance companies and also have some life insurance attached to them. This enables you to avoid paying any tax until you encash the bond. The idea is that by the time you come to encash the bond, you may be subject to a lower rate of income tax, for example when you’re retired – or if you have become an expat or a non-dom, you may not have to pay any UK tax whatsoever. Many well known financial advisers are using this approach for clients.
8. Change from income investments to Capital Gains Tax In 2008, capital gains tax was lowered to 18%, and investors have since been looking to acquire returns that are taxed as capital gains rather than income. According to advisers, the 50% income tax band has sped-up this switch. Over the past year, demand for products such as zero dividend preference shares has significantly risen, as well as funds that work on a total return basis instead of generating income, such as absolute return funds.
9. Consider leaving the countryThis may seem like a rather extreme measure – but advisers at Cazenove and Schroders Private Bank have said that many of their clients are considering this option in response to the substantial tax demands.

To mark the start of the 2009 National Consumer Week we have focussed on a handful of laws that you may find extremely useful when buying products and services, especially during these turbulent times.

You may or may not  have noticed it, but consumers are fighting a war against the firms they have to deal with after falling victim to mindless companies, whether it be due to faulty products that need replacing, or out-right poor service. (more…)

Investment bonds have proven to be a hit amid the financial crisis, after the Bank of England cut its base rate to 0.5% – the lowest on record, forcing banks to reduce the amount of interest paid on regular savings accounts.

Investment bonds can vary significantly, but the general rule around them is that in exchange for some kind of risk, they provide the potential to earn higher returns that those offered on standard savings accounts, as your investment is not generally tied to fixed interest rates, but on the success of the area you invest in. (more…)

Fuel Prices

1. Keep your tyres fully pumped-up and cut your air-conditioning usage

It is estimated that half of all drivers in the UK are driving with under-inflated tyres. This increases the resistance and therefore raises the amount of fuel used. The RAC advises that your fuel bills will increase by up to 2% if your tyres are not fully inflated to the recommended pressure.

Ensure your tyres pressure is kept at the correct level by checking them once a week. You can find out the recommended pressure readings for your tyres by consulting your car manual.

According to the National Energy Foundation, using air conditioning will increase your fuel consumption by up to 25%, so only use it when absolutely necessary. An alternative method to stay cool is opening the air vents, or even simply opening the windows. However, if you’re travelling over 60mph an open window will increase drag which can end up costing more than having your air-con on.

2. Service your vehicle

If you fail to service your vehicle regularly you could be reducing fuel economy by over 10%. Some of the key areas that must be covered are changing the air filters, as according to the RAC, dirty filters can seriously increase fuel usage; and regular oil changes, as clean oil will reduce the wear caused from friction of all the moving engine components, thus improving fuel economy.

Both of the tasks mentioned above are inexpensive and can help to drive your fuel costs down.

3. Change your driving habits

Changing the way you drive can drastically reduce fuel consumption, and this isn’t just about refraining yourself from putting your foot down.

Try to keep you gears higher. This will allow the engine to not have to work as hard and thus reduce the amount of fuel required. When using this technique ensure you are in a safe environment to do so, as using higher gears gives you less control over the car.

The RAC claims that if you avoid braking sharply then accelerating, you could save you up to 30% on fuel costs. The National Energy Foundation recommends that those driving a petrol car should change up a gear at 2,500rpm and at 2,000rpm for diesel cars to get the best fuel-efficiency. When starting from a stopped position, accelerate slowly as this will keep your revs down.

If you drive at 85mph you will use approximately 25% more fuel than at 70mph, so keep to the speed limit, especially on long motorway journeys.

4. Lose unnecessary weight and reduce the drag

Remove things from your car that you don’t require for your journey, such as removable seats, roof racks, and boot luggage such as sports equipment. Reconsider installing accessories that will add significant weight to your car and wide tyres that will add rolling resistance. According to the website save-petrol.co.uk, on average, each additional 50kg in weight will increase your petrol consumption by 2%.

Novelty flags and fancy sun roofs will also effect the aerodynamic drag of your car, thus increasing how much fuel your car will guzzle. Another interesting fact is that the weight of the fuel you carry will also effect how much fuel is required to move your car, so never fill your tank up to the top.

Always shop around for your fuel to find the best prices, you will be amazed at the difference in prices between cities and suburbs. But don’t defeat the object of cutting your  costs by driving too far out of your way to find the best fuel prices, as this will cancel out your savings. Try to tie your trip to the petrol station in with a regular trip, such as your weekly supermarket shop.

5. Helping the environment will help your wallet

Try to get into the habit of using other means of transport when making small journeys as these can be the least fuel efficient of all, especially in towns where you are constantly stopping and starting. Cars also use more fuel when cold, so a car that would usually do 40 miles to the gallon when motorway driving, may fall as down below 15 miles per gallon on a short journey. If you could walk or even cycle these short journeys you will notice the difference.

If you have to use your car to commute to work, if possible it is definitely worth considering car sharing with a colleague, as this can cut your fuel bills in half. Alternatively, look into park-and-ride schemes. If you can’t do either of the above, plan your journey to make sure you are taking the most cost effective route, and keep an eye on traffic reports to avoid hold-ups.

Something also worth noting it that a small car will consume a litre of fuel every hour when stuck in a traffic jam, but larger cars guzzle double this amount

When looking to buy a new car, look around for the greenest in your price range as this will not only give you major savings in fuel costs, but also give out lower CO2 emissions which directly effects how much your car will cost to tax.

6. Clubcard points on your fuel

Supermarkets tend to offer the most competitive fuel prices, and they are very conveniently placed allowing you to kill two birds with one stone by doing your grocery shopping and filling up in one journey.

As well as offering good rates, some supermarkets also offer clubcard points for every pound spend, on petrol as well as in store. This means that if you stick to the same filling station, you can accumulate points later used to purchase goods that you wouldn’t have otherwise had.

To increase your reward points you could take out a Tesco Clubcard credit card, offering 5 points for every £4 spent. At the end of each month you receive clubcard vouchers based on the amount of points you’ve earned, which can be spent in-store on your petrol or at Tesco Direct. You can even turn Points into Airmiles!

The Tesco Credit Card also comes with a range of other attractive features and discounts, so it might be time to switch your card and make the most of your savings.

A survey carried out by department store John Lewis reveals that 18-24 year olds are the one of the most ‘house proud’ age groups, with almost a quarter of those that took part in the survey revealing that they are reluctant to entertain at home for fear of potential party accidents – close to three times  those aged 65 and over, with just 8% worrying about damage, and more than double 55-64 year olds (10%).

The study, involving 2,014 adults from Greenbee Home Insurance (part of the John Lewis Partnership), also found that 26% of this age group ask guests to remove footwear before entering their homes, almost double that of those aged 65 and over (14%) who have been found to have a more relaxed attitude.

It has been suggested that this new age of thinking has been brought on by the credit crunch, as 14% of Brits said they could not afford to replace damaged or broken items based on their current financial situation.

These findings may come as a surprise, turning stereotypes on their head, with a new breed of CHAPS – Cautious Hosts Against Party Stress.

It appears that the Midlands is Britain’s most house-proud region, with an above-average concern in all areas. Over a fifth (21%) of Midlanders make their friends remove their shoes when visiting (compared to 15% of people in South East/London) and 16% prefer not to host house parties, fearing that a party could result in damages caused by party accidents (compared to just 10% of Scots).

These results confirm that the financial crisis has turned the Britain into a nation of paranoid party poopers, but this view can be seen as well justified, as 14% said they’re more worried about household accidents or breakages than ever before as in the current economic climate as they can’t afford to replace any damaged items – rising to one in five (20%) of 45-54 year olds and 17% of women (compared to 11% of men).

James Furse, managing director, greenbee.com said: “It’s no surprise that people, regardless of their age, are cautiously house-proud, particularly with financial concerns foremost in the thoughts of a significant proportion of people.

“While those without cover are understandably concerned about the cost of an unfortunate accident while entertaining, even those with home insurance may want to consider checking their policy small print to make sure they’re covered for all eventualities. Ensuring you have the right home cover in place may offer peace of mind, along with valuable protection.”

There are a number of insurance providers offering cover that will help to offer peace of mind when hosting such an event, so if you fit into the ‘concerned host’ group, be sure to check them out!

As more of us are feeling the pinch from the credit crunch, many have tightened up on spending, becoming more aware of what they’re spending and taking a more savvy approach to their finances. But although people may be cutting back on luxuries, many have drawn the line at sacrificing their summer holidays – could it have anything to do with the weather I hear you cry!?

Where are the most cost-effective destinations in terms of currency? Is it cheaper to leave booking until the last minute? When is it worth paying with plastic abroad? These are some of the questions that you should consider when looking to get the best value from your holiday.

Many people will be making a change from the norm when looking on where to travel for their summer holiday this year. A recent poll found that almost half of those asked said they would be reassessing holiday plans for 2009, and close to a fifth said they would be seeking a cheaper holiday.

The following ‘money saving tips’ can be incorporated into anyone’s holiday:

1. Choose your destination wisely – Consider choosing a destination based on how much value you will get from your holiday pound – The euro zone has become far less attractive in recent months due to poor exchange rates, so try looking further afield.

2. Shop around for your travel insurance – There are savings to be made when looking to insure yourself while abroad, such as not going for a travel insurance policy that covers you for unnecessary things such as extreme sports when you plan to lie on the beach all day. At the same time it would be unwise to not declare something that could later void your policy, as this could cause serious problems and end up costing you dearly.

   If you travel for than twice a year, it may be worth looking at annual cover. Also, if you use credit cards, consider looking at what’s on offer in the market, as some cards come with a range of perks including annual holiday insurance. Rachel Cutler from Tesco Travel Insurance said: “Travelling without insurance can be a costly business, and it can leave you high and dry in a medical emergency. To save money, anyone who travels more than twice a year, including weekend breaks, will be better off with an annual policy; and if you’re unlikely to venture further afield pick European cover only – you should be able to extend the territory if necessary.”

3. Not just Where, but When – If you’re looking at travelling to a far-away country or have already decided on your destination, then it can be better to book as far in advance as possible. If you’re not bothered about where you want to go, leaving it till the last minute can often give you a much better change of bagging the best bargain!

4. Every penny makes a pound – In the current climate people are likely to be wary of how much they fork out for the actual holiday in terms of travel/accommodation costs, but it can be the little things that we don’t plan for that add up. For example, research carried out by Santander Credit Cards revealed that a whopping £1 billion pounds was spent replacing essential items that holidaymakers had left at home!

   It may seem obvious, but make a list well in advance of your travels as this will give you time to think about everything will need so you can avoid getting billed for being forgetful.

5. Keep your eye out for a bargain – carriers like ryanair often have great sales allowing you to get away cheaper. The introduction of low-fare airlines have swayed many from sticking to UK destinations like Blackpool, to be a little more adventurous and hit the skies, and the best thing is it is likely to cost you less! Although these low cost airlines tend to fly to closer destinations around Europe, they do fly outside the euro zone too, so it’s well worth checking how the pound stands against these currencies.

6. School holidays – The unfortunate reality is that families with young children are generally made to pay more for taking their summer holiday during the school holidays, especially when looking to go on a package holiday. According to research by Santander Credit Cards, Brits that go on holiday abroad during this period can end up paying 40% more than the same holiday taken in mid-August. You’re unlikely to even get away from this when holidaying in the UK – while you may avoid poor exchange rates, UK resorts tend to increase rates by an average of 39% during the school holidays.

   Head of Abbey Credit Cards – Callum Gibson, said: “While school holiday premiums may be inevitable, Britons heading abroad this summer can save money by cutting out unnecessary costs such as foreign exchange fees, which are charged by most providers for card transactions made in a foreign currency.”

7. What to be aware of when exchanging foreign currency – To begin with, there’s no such thing as ‘commission free’ so don’t be fooled by a bureau de change making such a statement. This is because they have to make their money somewhere, so is usually in the form of poor rates. The best thing to do is order your currency in advance as many companies will deliver it for free, so avoid leaving it until you get to the airport as you’ll end up paying through the teeth before you’ve even left the country!

   Sam Gooch, travel money expert at which4u.co.uk said: “One of the most important things to consider when buying foreign currency is the exchange rate you will receive. “Many banks and airport bureau de exchanges’ are devious in the way they attract custom through advertising 0% commission, while disguising their fee with high exchange rates that fall well above average.”

8. Is cash always king? Making payments abroad – It is extremely easy and convenient to pay for goods and services by plastic, giving you peace of mind for a number of reasons. You may not want to carry too much cash around, especially when in unfamiliar surroundings, after all if you lose cash you are very unlikely to see it again.

   Using a credit card can offer you protection against fraud, allowing you to get back any money lost as a result of fraud from your card company. On top of this, providers now offer a payment protection policy to cover you for all purchases made on your credit card between £100 and £30,000. This feature is provided by law, under Section 75 of the Consumer Credit Act, and covers you against anything bought on your card within this price range that turns out to be faulty or never gets delivered.

9. ET Phone Home! From the start of this month lasting until the end of August this year, Vodafone are providing a new service to allow people on the Vodafone network to make or receive calls or texts home from abroad (from specified countries) at the standard UK calling rate.

   The Vodafone Passport scheme is free to join, allowing customers to benefit from calls to the UK from abroad at standard calls rates, dropping the connection fees used in the past (75p + standard rate).

   Another great feature in this offer is that you can even use your inclusive minutes to makes calls on holiday. You have to join the scheme to qualify for this deal, so don’t forget to add that to your list of things to sort out before you go. The countries included are:

   Albania, Andorra, Austria, Belgium, Bosnia, Bulgaria, Canary Islands, Channel Islands, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroes, Finland, France, Germany, Gibraltar, Greece, Hungary, Iceland, Isle of Man, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Madeira, Malta, Monaco, Norway, Poland, Portugal, Republic of Ireland, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, The Netherlands, Vatican City, New Zealand, Australia.

10. Travelling by train? – A popular way to travel around various countries is by train. However, this can work out very expensive, especially when moving around on a whim, as 9 times out of 10 if you choose to pay on the day you will end up paying an extortionate fare.

    One way around this is to consider an InterRail ticket. These unique tickets charge a one off fee and allow you to travel between different areas of the world using your pass. Some trains may require a supplement, such as high-speed and sleeper trains.

    Take the European ticket as an example. You can choose from a number of different durations to best suit your travel needs, i.e. 22 days continuous; 1 month continuous; 5 days within 10 days; 10 days within 22 days, all varying in price, and you can get a discount if you are ages 25 or under.

    I mentioned above that you may want to stay away from the euro due to poor exchange rates, but this pass covers a whole range of countries, so you may wish to follow a path that avoids this currency, and with 30 countries to choose from, you really are spoilt for choice! The Global euro pass covers the following countries:

    Austria, Belgium, Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Denmark, Finland, France, FYR Macedonia, Germany, Great Britain, Greece, Hungary, Italy, Luxembourg, Montenegro, The Netherlands, Norway, Poland, Portugal, Republic of Ireland, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey.

    If you are only interested in a single country, you might wish to go for a one country pass – which entitles you to travel within your chosen country as well as extra benefits such as discounted or free shipping services and reduced admissions to museums.

    Alternatively you could go for the InterRail Benelux Pass offering access to trains within Belgium, The Netherlands and Luxembourg; or the Greece Plus Pass, which includes ferry crossings from and to Italy as well as unlimited access to trains across Greece.