30 months of 0.5% base rate: How to make the most of your savings

pocket moneyWhen the Bank of England Monetary Policy Committee slashed the base rate to 0.50% 30 months ago, very few people expected it to remain at this historically low level for this long.

However, the ongoing economic uncertainty has persuaded the Committee to avoid increasing the base rate due to fears that higher mortgage payments could force homeowners to default on their loans. And savers have suffered for more than two years as a result.
Even when rates are low, there is a huge difference between the best and worst accounts on the market, though. That's why we have scoured the market for the best deals for you.

ISAs
One of the best ways to maximise your savings by avoiding paying tax is to invest as much as you can in an ISA.

The total ISA allowance for this tax year is £10,680, £5,340 of which can be held in cash. And one of the best easy-access ISAs available at the moment is Halifax's ISA Direct Reward paying 3.00% (or 3.20% for qualifying Halifax current account customers).

It can be opened with just £1 and managed online, over the phone or via Halifax branches.

Easy-access accounts
If you have already used up your ISA allowance and want easy access to your savings, the best account on the market at the moment is from Derbyshire Building Society, part of the Nationwide Group.

Its NetSaver account pays 3.11% gross on anything from £1 to £1 million (although only the first £85,000 is protected by the Financial Services Compensation Fund) and allows unlimited, penalty-free withdrawals.

The main downside of the account is that the headline rate includes a hefty 2.11% introductory bonus lasting until November 30, 2012, meaning that you will have to find a new home for your money at that point to avoid missing out on more competitive deals.

If you tend to be disorganised when it comes to your finances, you might therefore be better off with the West Bromwich Building Society WeBSave Easy Access account, which pays a slightly lower rate of 3.06%.

Its headline rate also includes an introductory bonus. But at 1.06% its loss is much less damaging to your returns than the loss of the bonus linked to the Derbyshire account - which could prove a godsend should you forget to switch your account once the bonus period comes to an end.

You will need to invest at least £1,000 to open a West Bromwich WeBSave account, though, while the maximum balance is £100,000.

Fixed-rate bonds
If you do not need access to your savings for 12 months or more, then you can benefit from even better rates by opting for a fixed-rate bond.

Britannia Building Society, for example, is currently marketing a one-year fixed-rate bond paying 3.4% on between £1,000 and £1 million.

You can also get close to 4% over two years and well above 4% over five years by seeking out the best fixed-rate deals.
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