Cash accounts work just like other bank accounts — except you don’t pay any tax on your savings. There are ways to find the best interest rates, compare cash account providers and make the most of your allowance.
Whatever the reason you are saving, everyone has the same question — how can I make my cash work for me? A report by an online journal, mirror.co.uk, gives some tips on how to shop for the best interest rates.
*Have a fixed account
A fixed account protects your savings from the taxman, meaning you can save more with the interest tax-free. If you are willing to take more risk, there are other options available, like stocks and shares.
*Aim for the best interest rate
Some bank rates are low, so you have to search hard. Don’t just go for the first you see. If you want your money to keep its value, you want the cash provider to pay you a rate that at least beats inflation. And the higher the rate, the more you can grow your pot of savings.
*Compare providers
You can get a sense of the interest rates using a comparison website. Some interest rates are ‘teaser’ rates, which expire after one year.
* Check with your bank
If you already have an account with a bank, you may be able to get a better deal on your cash. Once you know what rates are out there, check your bank’s website or ask in your local branch.
*Save regularly
If you have spent time shopping around for the best rate, make the most of it.
The earlier you start saving, the more the interest builds up, which helps you grow your savings. If you are earning a regular wage, set up a direct debit to your cash so you get into the habit of saving.
*Plan ahead
You may be able to access your cash instantly, depending on the rules you signed up to. But if you take money out, you cannot claim that part of the allowance again.
*Keep an eye on the time
You could save a huge amount in one year. After that, you can save another funds over the next year. But if your bonus rate has expired, you may find yourself facing disappointing returns on your cash. That is when it is time to start thinking about switching account again.
