Yesterday we discussed moving current accounts to get a high rate of credit interest on your money. Since most of these high paying current accounts have a maximum balance on which the competitive interest rate will be paid (except for Coventry Building Society with their Coventry First account), you need to find a home for any money left which exceeds this limit.
As is the case with most financial products, the market has become increasingly competitive over the past few years. ING started the war with its instant access savings account (now totally uncompetitive) and others have followed.
The three leading companies for hassle free, instant access savings are Icesave (run by the Landsbanki, an Icelandic company), Sainsbury's Bank and ICICI (run by ICICI Bank of India). Icesave currently pays 6.2%, Sainsbury's Bank 6.25% and ICICI 6.3%.
If we were selecting a new account, we'd rule out ICICI immediately as they are not a signatory to the Banking Code, meaning that you do not get the full protection afforded by UK banking regulations. There is not much between Sainsbury's and Icesave, although we do have an Icesave account and have been very impressed by the simple web site and responsive customer service.
Setting up a new savings account is so easy and can be done online within about 5-10 minutes. If you don't fancy the hassle of switching your current account (which really isn't that much hassle nowadays) get yourself a high paying savings account and make sure you put most of your money in there where it will work harder for you.
If you've already used your ISA allowance for the year, using a high interest savings account as your emergency fund is the next best option.
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