Savings & the effort to switch

Wednesday, 4th August 2010 17:47 - by Resident IFA

With interest rates at a record...and seemingly immoveable...low level, what to do for the best? I, like anyone reading this, have one key (obvious) option...elbow grease. By this, I mean trawl the newspapers and internet for the best rates. Beware those websites, however, that have biased or ‘sponsored’ listings. If you read the small print, you will find if they are providing a fair and full representation of the savings account market...or the one that pays them best. I recently suggested a Client of mine harbouring £100,000 in a business savings account change to another provider. The rate they were receiving was around 0.5% gross and the rate they moved to was 2.5%. This is a massive difference when talking about this sum of money. This was a scenario where they required instant access, but you can achieve even better (fixed) returns if you can, say, tie your money up for 1 or more years. “But I can’t be bothered with all that paperwork and hassle every time I switch” I hear you cry. Again, using the aforementioned Client as an example, the process was straightforward and without stress. They may have been lucky, but I believe banks and savings institutions want your money enough nowadays to make the process as smooth as possible. Besides which, it may realistically be that you only consider and review your interest rate received once per annum. If you are retired (with time perhaps less at a premium) and don’t mind the odd form, you may even check your rates and switch as regularly as quarterly. Like most things in life, it seems to boil down to the fact that you will get out rewards in direct relation to the effort you expend. The one thing that does annoy me, however, is people stuck in savings accounts that had an attractive interest rate on Day 1, but that is a dim and distant memory. Beware lethargy! Don’t let the banks and savings institutions ‘milk’ your hard-earned savings. Make them work for your business and get the returns you deserve...even relative to today’s low-interest environment. Until next time...