How to make the most out of your bank and savings accounts
Banks and building societies have been competing with higher interest rates in line with the Bank of England hiking interest rates.
While this has been a blow for many mortgage borrowers, it has led to more competitive savings rates hitting the market. Here we leave with some top tips from Which on the best best savings accounts and other ways for you to make the most from your bank account.
1. Find the best savings account for you
There are various different ways to save your money, including regular savings accounts, instant-access, and fixed-rate bonds. When choosing between them, consider how often you’d like to be able to deposit and withdraw savings.
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Which? found that the best restriction-free instant-access savings rate is currently 3.15% AER (Annual Equivalent Rate), offered by Chip. However, you can find higher interest rates with a fixed-rate account, for example: the best rate for a two-year account is 4.47% EPR (Expected Profit Rate), offered by Al Rayan Bank (Rates correct as of 23 February 2023).
2. Take advantage of switching offers
If you're already looking to move banks, it's worth seeing what incentives are on offer first. Switching to a new provider takes just seven working days and can often earn you a cash bonus.
For instance, NatWest has recently launched its highest-ever switching incentive for new and existing customers who move to its current accounts. Those thinking of switching to the NatWest Select and Reward current accounts could pocket £200 for the move. You can also get £200 if you switch to a TSB Spend and Save account, or Spend and Save Plus, using the Current Account Switch Service (CASS) by 24 March.
Be sure to read the fine print in the terms and conditions when thinking about switching to a new account.
3. Packaged bank account perks
Packaged bank accounts offer perks such as travel insurance, breakdown cover or mobile phone insurance, in exchange for a monthly fee. Packaged accounts can offer a cheaper and more convenient way to insure yourself, but read the terms and conditions carefully.
Remember that these accounts are only worth having if you make the most of the benefits and services you’re paying for.
4. Earn rewards and cashback through your account
Cashback can help you make money on your spending. Many banks and building societies offer cashback on monthly bills and loyalty rewards as an incentive to open or retain an account.
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Some pay as much as £20 per month. The Santander 123 account was ranked highly by Which? and pays up to 3% cashback on selected household bills, capped at £5 per cashback tier each month – however, it also comes with a £4 monthly fee.
5. Check the overdraft fees on your bank account
Going overdrawn can be costly, especially as some accounts charge up to 39.9% EAR (effective annual rate). If your bank charges a high rate of interest, it could be worth checking to see if you can switch to an account that offers a lower one – particularly if you use an overdraft regularly. Nationwide currently offers a free authorised overdraft on its FlexDirect account, subject to status, but this only lasts for the first year.
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