Disposable income is falling for many British households, as their incomes struggle to accommodate essential everyday purchases. This means having some savings put aside for a rainy day is even more important than ever before.
If one of the main bread winners for example lost their job in your household, or an adult child needed help funding a house deposit or a wedding, these savings will be something you come to rely on.
Find out which types of savings products are the best for your financial situation and savings goals, and which providers offer the best rates.
If you can afford to put a certain amount of money away and leave it in a savings account untouched then Investment ISAs or certain Cash ISAs are probably your best choice.
Here we will look at Cash ISAs as they are a more short term savings products which still offer good rates of interest. Better still, the interest you earn on these savings is kept by you the saver and not taxed.
While you can get flexible Cash ISAs so you can withdraw money from the account without losing the savings, the best rates of interest are found on fixed termed ISAs.
The NatWest 3 year fixed rate ISA provides a return of 3.70 percent on the savings you have in the ISA. A minimum of £1,000 is required to open the ISA, and up to £5,340 can be invested per year.
Fixed Rate Bond
Another good option is to put your savings into a bond, and again these are often suitable for those who are able to lock away their money for a period of one to three years usually to gain interest at a rate that does not fluctuate.
While you can invest your money for three years in a fixed rate bond, Santander are offering a good one year bond with a rate of interest of 3.35 percent. The saver is only required to invest a minimum of £1, so savers who are short of money do not need to put in a large chunk of cash to reap the interest.
Instant Access Accounts
For those who cannot afford to lock away a set amount of money into a savings account for a period of time, an instant access savings account is your best bet.
These types of accounts mean savers can access their money at any time throughout the contract of the offer.
Usually the rates of interest offered on these types of accounts are not as high, but they still enable consumers to earn money on their savings.
NationWideís MySave Online Plus for example offers a gross rate of interest of 3.01 percent on savings – this is paid monthly and includes a 1.51 percent gross p.a. bonus fixed for 12 months. Savers opening this account are required to deposit a minimum of £1,000.
While for those who cannot reach this deposit, Santander offers a rate of 3.0 percent on their eSaver Issue 3. Although the interest is paid annually, the savers are only required to put down a £1.00 deposit to open the account, and this is also an instant access savings account.