There’s no doubt 2023 has been a challenging year, with the ongoing cost of living crisis and the Bank of England continuing to raise interest rates in a bid to combat high inflation. Whilst higher rates have added pressure onto borrowers who now face rising mortgage bills, what impact have these measures had for savers?
Rising rates are good news for those who want an extra boost to their savings pot. After a decade of lower savings rates, now is a great time to check where you hold your savings and to make sure your money is working as hard for you as it can.
Finding the right savings account
Easy access savings accounts
Regular saver accounts
Regular saver accounts allow you to put aside a set amount each month, often for a period of 12 months. These products offer a higher interest rate and are great option for those looking to save ‘little and often’. Unlike an easy access account, you could be charged for withdrawing any of the balance or if you miss a monthly payment.
Coventry Building Society’s Regular Saver helps you build your savings pot by allowing you to set aside anywhere between £1 and £500 a month for 12 months at a variable interest rate, without charging you if you miss a monthly deposit. There’s a charge equal to 30 calendar days interest on the amount you withdraw if you do need to access to your money.
Fixed term accounts
Individual Savings Accounts or ISAs
An ISA is a tax free wrapper around a savings product which means you don’t pay tax on the interest you earn. An ISA can be an easy access, a regular saver or a fixed bond. They also come in different forms such as Cash ISAs, Stocks and Shares ISAs, Innovative ISAs and Lifetime ISAs. You can put money into each kind of ISA each tax year, up to the annual allowance.
At Coventry Building Society, we offer Cash ISAs. With our Limited Access ISA (Online), you can benefit from a competitive rate and can still take money out of your account up to six times a year with no charge. We also offer Easy Access and Fixed term ISAs available to suit individual needs.
What about tax on interest?
Everyone has a personal savings allowance (PSA) which is the amount you can earn in interest on your savings before you have to pay tax. The amount of interest you can earn before tax depends on your income and for a basic rate tax payer it's £1,000 per year. Money saved in an ISA is tax-free therefore the interest you earn on savings in an ISA doesn't count towards your PSA.
Now is the time to check your savings are working hard for you and make the most of the more favourable interest rates available in the market.
Choosing an account for children
Starting them on their savings journey with an account that's right for them.