Northern rock-ed – get ready to roll

Savers are caught between Northern Rock and a hard place withdrawing an estimated £2 billion in cash as fears about the bank’s future has spread.

One couple, Christopher and Fiona Howard who had £1 million in savings tied up with the bank were so concerned about the money resting in their online account that they layed siege to the manager’s office at the Cheltenham branch.

If you’ve been caught up in the worries or even if you’re just thinking about what to do with your savings then MoneyExpert.com can help you find the best deal.

Cash in a basket

If you have a significant amount of savings like the Howard’s then you would be well advised to spread your money between different banks and financial service providers. Don’t give £1 million to one bank – look around for a range of deals.

Don’t put all your eggs in one basket because if the company is in trouble or just cuts its rates your risk is spread.

This way you’re exposing yourself to less risk should one of the companies perform badly.

Cash in a flash

If you have savings taken out of Northern Rock to reinvest then you should think about how quickly you need your money back.

Bonds and notice withdrawal accounts will only give you limited access to your cash and you will have to wait a certain period or follow certain procedures to get your hands on it. It can take as long as a year to get your cash back unless you are willing to pay a penalty fee.

This is compared to instant access savings accounts and most individual savings accounts (ISAs) which will allow you to take your money out whenever you like.

Both sorts of savings methods have their advantages – it depends on whether you can trust yourself not to touch your savings for every little purchase.

Taking account

Instant access savings accounts – are just like a normal bank account except they are designed for savers so you can expect a better interest rate than you will get on most current accounts, and it can be as much as six per cent.

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The fact that you have unlimited access to your money means that you may miss out on the very top rates of interest offered in others savings accounts.

Notice to withdraw savings accounts – these are similar, but you will have to provide your bank with notice before withdrawing. This notice is usually around 30 days but the notice on some accounts is as short as a week. These limits tend to discourage customers from withdrawing and as a result can offer slightly better rates of interest.

Regular deposit savings accounts – are designed for savers looking to put money away every month and therefore might not be ideal for customers looking to reinvest a sum of money. However these accounts pay out big rates of interest, in some cases as a high as 8%. With these accounts there will be a minimum amount of money you will have to pay in every month.

Bonds – are investments where you give a company a certain amount of money and they then agree to pay you back your initial investment plus an agreed rate of interest, normally around 6%, at the end of the period.

Individual savings accounts – are a tax free account available to savers. They are limited however to savings of £3,000 in a mini-cash ISA in a tax year. Like bonds, they are currently paying out around 6% in interest.

Back in the bank

There’s little point having your savings sitting around the house – they might get stolen and while they’re there you aren’t making any money on them.

There are various options available to savers with money to play with, but whatever you chose to do with it be sure to consider when you need the money and if there is a lot of it spread it between as many companies as possible.

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