By Stephen Jones
With the school’s soon open for business again, the holiday season is coming to an end – meaning it’s time to start saving again. With that in mind, we offer some tips to help you make the most of your money in the latest edition of our Savings Watch series.
Inflation-busters are back... but act fast
Ever since the withdrawal of National Savings & Investments’ hugely popular Index-Linked Savings Certificates, savers have been lamenting the lack of a real inflation-busting option for their money. Now, after several weeks, a couple of accounts have stepped into the breach, although you’ll have to act fast to catch them.
First to enter the ring was National Counties Building Society, with its 2nd Issue Index Linked Cash ISA, promising a return above inflation for over 5 years. This was, at the time of writing, the only inflation-beating ISA available, and as a mark of the feverish demand for this sort of product, the ISA was withdrawn on 25 August, just four days after it was put on the market.
Since then, Northern Rock brought it’s hugely popular Little Rock Fixed Rate Bond Issue 2, offering a fixed 4 per cent gross AER on any per-child savings up to £20,000 until 1 October 2013. Parents or grandparents interested in the account are warned to act fast – the last similar bond offered by the building society was pulled within a week due to huge demand.
Those saving for children also have another inflation-beating option available from the Halifax. Its Children’s Regular Saver offers 6 per cent AER on regular savings of between £10 and £100 a month, which will again beat inflation as long as their overall savings are under the tax-free allowance of £6,475 per tax year. In order to have this interest paid gross, you’ll have to fill out an R85 form in bank branches or download it here.
For savings and mortgage options for adults, take a look at our recent guide to making high inflation work for you.
Are you shopping around for your annuity?
Around 30 per cent of people don’t shop around when looking for an annuity, according to recent research from the Association of British Insurers. The government plans to make all pensions companies alert savers of the availability of the Open Market Option (OMO), which gives them the opportunity to pick their annuity from the whole market.
George Ladds, head of investment and pension research at Fair Investment Company, believes that failing to shop around could see annuitants missing out on an extra 40 per cent on their pension pot, whatever its size. So make sure, if choosing an annuity, that you exercise that OMO.
Watch out for the hidden savings traps
Do some savings accounts look good to be true? Well, probably not with interest rates so low, but nonetheless it’s always worth keeping a keen eye on the terms and conditions of some of the higher yield accounts. In fact, recent research from Which? Money shows that there really is no such thing as a free lunch when it comes to savings.
Its research found that savers were missing out on their agreed interest by failing to keep to strict terms and conditions, even if only by mistake. One Which? member found his preferential interest rate revoked by Yorkshire Building Society when his agreed £500 monthly investment was accidentally paid in twice.
So, if you don’t want to lose out, make sure you keep a keen eye on that small print.
This month’s featured product...
The Post Office Online Saver offers an attractive option for those looking for a regular income from their savings but reluctant to lock their money away for long periods.
Aside from benefits such as 24 hour, seven day a week access – making it ideal for access abroad - it has no limit on the number of withdrawals and a competitive 2.75 per cent gross AER variable on deposits over £1. What’s more, you can choose whether you want to collect your interest monthly or yearly, giving it that little extra flexibility.
!!-- Confused Replacement Quote Me Savings --!!
