Switching Your Bank Account

It seems most people don’t think about changing bank accounts because they don’t see much difference between all the various accounts, and so are put off doing so. However, if your account is in credit and you don’t receive interest from your bank, or, if you’re over drawn and are being charged a high interest rate for the borrowing, then you could well benefit financially from changing banks.

Start by working out what you want from your bank account, and then compare what’s available. Comparison sites such as Moneyfacts, Moneysupermarket.com and uSwitch can search for bank accounts with best interest rates on overdraft facilities as well as for the interest rate you receive for being in credit.

Look at how you’ll bank and what you want from your bank – do you want to be able to bank online, by phone or in branch? Look out for short term offers such as cashback when you switch accounts, and do remember to read the small print. It might sound boring, but that small print can really make a difference and tell you what you have to do to qualify for the higher interest rate or the cashback payment etc.

Another thing to think about is the ‘faster payments’ scheme. Some banks have signed up to it, and others haven’t. If you want to be able to send money to someone in hours instead of days then look for banks which have signed up to this scheme, and avoid those who haven’t.

Look at one off payment limits too – most banks have a high limit around £10k, but some (Santander for example), have much lower limits (Santander’s is just £300).
Changing banks can take around 3-4 weeks, so make sure you’ve planned for those weeks in advance, and check that the bank will keep you informed about the process.

The Financial Services Authority website has information on it about switching bank accounts and can be quite useful. Also, if you’re account hasn’t been moved after 15 working days (3 weeks), then you should get the bank to chase this for you. It can also be worth asking if you’ll get a free overdraft for the period to cover the switch. For example, if a direct debit comes out of the new account before the money has gone in to cover it than you don’t want to find yourself with large overdraft fees.

The Banking Commission has offered recommendations which if introduced in 2013 as planned, will mean that the process of changing banks will take no more than 7 working days and it will be the responsibility of the bank who you are moving your account TO, to make certain that everything in the process of the changeover goes smoothly.

Top 5 tips for getting the most out of an online saving account

Are you thinking about getting an online savings account? Read these top 5 tips to help you.

1. Make the most of its online nature. Why not transfer a little bit of cash from your current account every time you check your balance online? If you are doing your banking online anyway, you may wish to get into a regular habit of putting some money aside each month – or just whenever you feel like it.

2. Keep checking the interest rates that you are getting. Unless the interest rate on your online savings account is a guaranteed or bonus rate for a certain length of time, you may wish to consider switching to a different product to get a more attractive rate.

Bonus interest rates do not last forever. When the bonus period has expired and the rate that you are getting has reverted back to the bank or building society’s normal rate, now may be the time to look around for something better.

3. Look at ISAs. Individual Savings Accounts are investment vehicles that offer tax free savings up to a certain limit per year. These accounts are the government’s way of encouraging people to save and prepare financially for the future.

4. Watch your balance. No doubt you are interested in keeping as much as possible in your online savings account so that you can save up for that rainy day. However, another reason to keep an eye on how much is in your savings account is that your interest rate may depend on the amount that you have saved. If your balance dips below the provider’s minimum, you may need to top it up to get the preferential rate that you were expecting.

5. Think about when you need to get to your money. Can you manage without tapping into your savings for a few years, or do you need them as a stand-by just in case you need to get access to some emergency cash? Whilst the highest rates may be available to the accounts that lock away your money for longer periods, you may wish to consider an instant access deal if that means that you borrow less on your credit card to get you by.

Top six tips on getting online savings rates

Are you looking for an online saving account? If so, you may wish to look at the following tips to help you choose the most suitable for your individual needs.

1. Think about how much you have to save. Some online savings rates are only applicable to accounts that have a minimum balance, which may mean that the highest rates may not be available to people who have less than that amount. Likewise, if you withdraw a sum and your balance dips below that amount, you may find that your rate goes down.

Some accounts may also offer certain rates only when the saver deposits a specified amount per month.

2. Consider what you are saving for and when you may need to withdraw your money. Some online saving schemes (such as savings bonds) may require you to lock away your cash for a number of years – others may permit instant access. If your finances are quite precarious, you may wish to choose an online savings account which lets you get your money back when you need it.

3. Be realistic about bonus interest rates. It may be tempting to go for the highest interest rates that your money can earn. However, with bonus rates, alluring as the initial high returns may be, you may wish to asses what the rate will be once the bonus period has expired.

4. Consider an ISA. It can be disheartening to lose the benefit of your savings by having to pay tax on them. Individual Savings Accounts may offer tax free savings solutions up to a certain maximum amount. Ask your provider for details.

5. Think about how you will make deposits. If you are a regular computer user, you may be happy about getting an online saving account that you can only put money into electronically. However, for some people going into a branch and having contact with a “real person” may be important.

6. Finally, after all these other considerations, do not forget that what you are looking for is a return on your money. Accordingly, you may wish to compare the interest rates that are offered by a number of different providers. Not only might you want to compare the annual interest rates that may be offered, but you may also wish to consider how often the bank or building society will pay your interest. Some providers may pay interest annually, others may leave shorter gaps between payments.

What are internet savings?

Although internet savings accounts have been around now for a long time, some people are still a little puzzled by the term.

It’s really simple and relates to a couple of key concepts:

• today the internet means that it’s typically possible to manage much of your routine banking from the comfort of your own home;
• it’s typically cheaper for a bank or building society to service your dealings through the internet than it is via a conventional bricks-and-mortar branch in the high street.

So, since as far back as the 1990s, some banks and building societies have been offering slightly better deals on savings if you do it all via the internet.

In a sense, internet banking and savings benefits everybody.

You have the convenience and comfort of instant banking from your own home. The bank, in turn, can perhaps use the savings they make to offer you better deals on your savings.

So, it may be worth finding out more about internet savings. You may see more going into your savings account as a result!

Top eight tips for finding a savings product

Savings may not be a subject that traditionally gets people excited. But if you look around for a product that suits your individual needs, you may find that looking into investment issues may be more interesting and worthwhile than you first suspected.
Bear these top tips in mind to give your search for an investment product some direction.

1. Keep your target in mind. Are you saving for something specific? If so, this may give your saving some focus. Even if you are not saving for a particular purchase, having a target amount in mind may help you to put some money aside every month.
2. Decide how much you will save – and stick to it. Whatever savings product you choose, it will be ineffective unless you actually transfer some money into it on a regular basis.
3. Decide how long you can afford for the money to be locked away for. Some accounts and products have minimum periods of notice that are required to get your money back.
4. Consider your own attitude to risk. This may determine the kinds of investments that you choose. For example, shares can fall in value and become worthless, which means that they have a level of risk in them. But on the other hand, they can soar in value, so could potentially have a high level of reward. A cash amount in a reputable bank account will only grow by the amount stated in the interest rate.
5. Consider your options. If you are looking for unusual products to invest your money in, there are plenty out there. From shares in timber yards to fine wines, potentially there is an investment opportunity for everyone.
6. Find out when you can get paid. If you have a large amount of money in a savings account, you may be dependent on the interest payments as income. Accordingly, you may be more interested in getting paid more regularly than someone who has other sources of income.
7. Some financial organisations offer an interactive tool where you can sift through their different savings options.
8. Finally, don’t forget about tax. ISAs are savings products that offer a tax free “wrapper” up to a certain level, and may be worth considering. Visit the Government owned site Direct Gov for more information.

Your savings

There are, apparently, some people who like to save just for the sake of it. They are not concerned too much about how their savings grow, just that they have a nest egg in a location somewhere.

That’s not a million miles away from just putting your money under the mattress and hoping that it stays safe. Even if it does, you may find when you remove it that there’s pretty much the same amount there as you put in.

However, you may have slightly more demanding expectations of what happens to your savings and if so, you may wish to read on.

Typical concerns

Many savers are typically looking for a combination of:

• the best possible growth (aka the most attractive interest rates);
• security and certainly with respect to their capital;
• flexibility around access to your cash if you need it;
• good service;
• online access and management.

That may seem to be not too demanding a list but unfortunately, one or two things on this wish-list conflict slightly with each other.

Access flexibility vs growth

As a general rule, the faster you potentially need access to your cash then the lower the growth rate you’ll receive.

If you agree to tie-up your money (whether it’s a lump sum or incremental savings) for longer periods through things such as locking it away for 12 months or committing to give the bank lengthy notice of any intention to withdraw it, then typically you’ll get more attractive interest rates.

Of course, some banks offer products that are a mixture of immediate access via a limited number of withdrawals per annum and a notice type account.

Providers

You can be sure that you’ll have plenty to choose from. The major finance names have many different products and they’ll typically be happy to offer clarifications if required.

Of course, choosing the right savings product is important.

Locking your money away for lengthy periods may cause you some trouble if you need it quickly. In such cases you may be reduced to paying financial penalties for withdrawing it or frantically trying to tunnel into the vaults!

A quick overview

In a typical case, you’ll probably find:

• standard accounts – instant and unlimited access but probably low(ish) interest rates;
• notice accounts – many different types but essentially all involve the principle of saving money and only being able to withdraw it if you give 7, 14 or 30 days notice etc;
• deposit accounts – typically used for putting in a lump sum and the basic idea is that you don’t touch it for a specified period and just watch it grow through some decent interest rates;
• bonds, stocks and shares – more specialised products that in some cases may involve risk to your capital even if the returns are potentially high.

The mattress

So, you can just regard your mattress or floorboards as an appropriate location for your savings – or you can use modern products, as per those above, to grow your money. Should be a no-brainer!

Money Saving Tips

Whether times are good or bad financially speaking, there is rarely any valid reason to waste money by paying more than is necessary for products and services. It is equally unnecessary to have money tied up uselessly.

Many people are surprised at how much money they can save, and how much money they can ‘free up’ by progressing a few basic ideas that are both good for the pocket and in some cases, good for the environment also.

Manage the consumption of heating energy.
Whatever the fuel source is, fuel is expensive. The advantages of insulation and energy efficient boilers are well known, but is it necessary to heat the house to T-shirt level? Turn the thermostat down a degree or two and put on a jumper – the savings will be significant over a winter.

Shop Around.
There is something to be said for convenience but don’t give in to the siren-like calls of that one big shop just down the road. Be prepared to walk around a little to compare prices. Even easier, use the Internet or phone to compare prices on those slightly bigger purchases. The savings can be dramatic.

Negotiate!
Many people in the UK find haggling and asking for discounts to be something of an embarrassment. This is completely different to many other European countries where the first asking or ticket price is rarely paid. Sometimes asking for that deal or reduction can save a small fortune. Be prepared to haggle and if necessary, to walk-away and go elsewhere.

Buy through the Internet
The Internet is not only useful for comparing prices of products on the high street, but purchasing items through the Internet can also save large amounts of money. Many retailers will offer significant discounts for on-line purchases, as it is far cheaper for them to sell online than through a normal store.

Make more food.
The cost of ready-made meals (lunches, take-aways etc) can be very high when checked against what is actually in the package. Convenience is fine, but buying fresh food and preparing more lunches and meals will save a lot of money each month and very possibly be healthier.

Throw Away Less.
Instead of having that quarterly ‘trip to the tip’ to clear out the garage or loft, consider instead how much of it could be sold. These days it is very easy to sell surplus items through websites such as Amazon or EBay etc. The prices received may not always be high, but again over a year they could mount up. Or why not do a boot fair?

Buy in Bulk.
In many areas of life such as foodstuffs, DIY materials and household goods, it is always possible to buy at huge discounts if buying in bulk quantities. Contact neighbours and families to form a ‘purchasing association’ and make these sorts of purchases in larger quantities. The savings for everyone will be very worth having.

Leave The Car At Home
Cars are VERY expensive to run and a massive cost component in the budget of many families. Statistics also show that the vast majority of car journeys are short hop ‘convenience’ journeys to the local shop etc. Try walking or using a bicycle. This will also be healthier.

Check Baseline Household Costs.
In the modern world there is ferocious competition between utility companies (phones, electricity etc) and as a result, some staggering deals to be had. This is also true in financial services covering things such as your household, car insurance or savings policies etc. Check around to see what these are and be prepared to change supplier – it is easy.

Increase DIY.
Many minor jobs around the home do not require a specialist tradesperson. Labour costs are expensive and if it can be safely done on a DIY basis then the purchase of a good DIY book and the liberal use of some elbow grease could save a lot of cash!

• Lots of money can be saved in day-to-day life
• Shop around
• Don’t throw things away but sell them instead
• Be prepared to do more yourself.

Is your money safe?

Savings and other bank accounts by British depositors are guaranteed by the government-backed Financial Services Compensation Scheme up to the figure of £50,000. Despite the recent international crises in the financial world, therefore, for the overwhelming majority of this country’s population, your money is remarkably safe.

Although the most recent figures available relate to 2007, the British Bankers’ Association estimate that only 2% of bank accounts held in Britain contain a balance of more than £50,000 and only 4% show a balance that exceeds £35,000 (according to a report by the BBC on the 30th of September 2008). 98% of all deposits, therefore, are safely guaranteed by the Compensation Scheme.

The introduction of such guarantees was not simply the result of the government looking to protect individual savers, however. It was prompted just as much by the finance industry’s desperate need for the capital represented by so many individual savings accounts. In this regard, banks and building societies have found themselves to be between something of a rock and a hard place.

They still desperately need savers’ deposits. But in order to encourage lending between themselves and to individual customers, they also need interest rates to be low – hence the Bank of England’s drastic one and a half percent reduction in its base rate during the final quarter of 2008. The deposit-takers, therefore, are being pulled in opposite directions. On the one hand, interest rates need to be sufficiently competitive to attract the savings so desperately needs; while those same interest rates also need to follow the underlying trend of the Bank of England base rate. The guarantee to individual savers – the guarantee that makes your money safe – is one of the principal factors in helping to maintain competitive rates for savers.

This is reflected in the way many banks and building societies have actually behaved in recent months. Immediately after the announcement of the 1.5% reduction in the base rate, for example, many savings accounts (especially those offering a fixed rate of interest) were withdrawn from the market. In the aftermath, however, the same banks and building societies had little option but to reintroduce new accounts and new attractions in order to attract the savers’ funds necessary to underwrite their balance sheets.

Although there has been an inevitable period of re-pricing, therefore, banks and building societies remain just as desperate for depositors’ cash and have to offer attractive rates of interest in order to get it. As ever, of course, the longer they get to keep such deposits, the more attractive the rates they are prepared to offer. Many fixed-rate savings accounts, which savers agree to leave on deposit for an agreed term (typically for a year), thus, continue to offer a good deal.

Moreover, they represent a good deal for both the banks, which receive the funds they need to stay in business, and the individual customers, who earn not only an attractive and competitive rate of return on their savings, but also enjoy the comfort of knowing that their money is safe.