Browsing "Money Saving Tips"
Savers should check the interest rate paid on their Individual Savings Accounts (ISAs) to avoid being caught out by bonus introductory offers.
Generally speaking, the best ISA rates available on today’s savings market come with a catch – the high rates on offer are likely to fall after 12 months.
This is due to providers offering bonus rates in order to attract more custom. However, once the bonus rate expires, the level of interest paid on your savings is likely to fall significantly, leaving you earning less than you could be elsewhere.
A report from the Office of Fair Trading found that just 11% of savers that hold an ISA will switch to a new provider each year.
Tax-free ISA savings accounts were first introduced in the UK 12 years ago as an incentive to encourage people to save. According to the latest figures, 17.5m people in the UK currently hold around £143bn in cash Isas.
ISA activity usually picks up around the end/start of every tax year (April 5th/6th) so competition is heightened in an effort to draw in new savers.
In April, the annual ISA limit rose from the previous level of £10,200 to £10,680 which mean savers can deposit up to £5,340 into cash ISAs and the remainder into stocks and shares ISAs or up to the full amount into a stocks and shares ISA.
Savers who currently have a cash ISA, or who are planning on opening one are being urged to check the interest rates offered and be aware of when they will fall so the account can be switched.
Fixed Rate Bonds
Meanwhile, those who are prepared to lock their funds away for an extended period of time are getting the best interest rates offered for over a year, according to Moneyfacts.
The financial information service has said that rates offered on relatively short-term fixed rate bonds have been on the rise since August last year.
The average interest rate for a one year bond I currently 2.85%, the highest level since March 2010.
This follows a rate of 3.42% offered on the average two year bond, 3.7% for 3 year bonds and 4.1% offered on 5 year bonds.
However, savers must be sure that they are happy with losing access to their funds for the agreed fixed duration, as requiring early access would result in a hefty penalty.
Any savers prepared to lock their savings away for an extended period of time have the potential to earn the best interest rates on the savings market, according to financial analysts Moneyfacts.
The firm has revealed that interest rates paid on fixed rate bonds with relatively short fixed terms have been rising since last August.
However, despite increasing rates savers are still worse off than they have been in recent years as decent returns are still had to come by due to record lows to the Bank of England base rate which has been sat at 0.5% since March 2009.
The encouraging movement suggests the Bank rate will rise in the coming months which would be passed on to savers through improved returns on savings accounts.
According to Moneyfacts, savers can expect to lock in on a rate of 2.85% with the average one-year fixed rate bond which marks the highest levels in over a year. Read More »
The replacement to the Child Trust Fund – announced at the end of last year, will be launched on 1 November 2011.
According to the government, the tax-free Junior ISA will allow parents to make contributions of up to £3,000 per year into these savings accounts – substantially higher than the recently scrapped Child Trust Fund which allowed just £1,200 of deposits per year.
In last year’s May Budget we leaned that Labour’s Child Trust Fund was to be axed, which soon became a highly controversial and high profile spending cut enforced by the coalition government. Read More »
Share dealing accounts offer an effective tool to manage your stocks and shares from one easy-to-access place, making it simple to track the progress of your investments giving you the potential for earning money online from the comfort of your own home.
With a share dealing account you can get access to shares listed not just on UK markets, but also on international stock exchanges.
These account can not only be used to buy and sell shares, but also provide the option of trading in many other types of investment including Funds (such as OEICS and Unit Trusts), Corporate Bonds, Investment Trusts and Gilts, helping you to make the most of the stock markets. Read More »
Savers looking to use up this years tax free individual savings accounts (ISA) allowance are in search of the best ISA rates before the new tax year begins.
All UK savers are eligible to an annual tax free savings allowance that can be used from 6 April to 5 April the following year.
Allowances cannot be overlapped across several tax years’, so the message to savers is ‘use it or lose it’.
Last year, the ISA allowance was raised to £10,200 from £7,200 for all those aged 50 and over, which was later rolled out to everyone else at the beginning of the current tax year.
Another increase to this allowance is planned for the next tax year which will become effective as of 6 April, pushing the amount at which savers can save without paying tax on their returns to £10,680.
The Bank of England base rate has continued to stay at it’s record low level of 0.5%, which has had a negative effect on interest rates offered on savings accounts.
However, ISA providers are expected to boost rates on some accounts to encourage savers to open an account with them.
The best rates on ISAs are currently paid to those that are willing to lock their funds away for a fixed period of time at a set rate – much like the more traditional fixed rate bond. These fixed rate ISAs offer an effective incentive to leave savings untouched.
Credit cards offer consumers several features that can be used to their advantage, and if used properly offer a completely free service.
Credit cards have always had a bad reputation as an easy way to fuel debt. However, providers have been working hard to shake off this stigma, offering features that are designed to help consumers to manage their spending effectively and in some cases even help to reduce their debt in the cheapest possible way.
These days most credit card deals offer a main feature that will attract a specific customer type depending on what they require.
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