How to get a high savings rate

With the Bank of England setting its rate at an historic low of just 0.5%, it can prove difficult to find the best rate savings account. Just to complicate matters further, banks are constantly changing their online savings rates. In order to achieve real terms growth, you need to trawl the market once every 12 months to make sure that you are getting a good deal.

How to find the best savings rates

Do not rely on your bank
Banks offer the best deals to new, not existing customers. Unless you are prepared to tie up your money, they would rather have you left your money in a low interest account. Why? It means that they make more profit. The difference that they receive from investing your funds in the money markets means that they achieve a better net return. Savings accounts rates
If you want to enjoy a better return, you need to trawl the market for the top savings account. It is a lot easier to use a website, such as Moneysupermarket.com, to trawl the market for the best deal. This is because you may miss a deal or simply are not aware that a certain building society exists. There are also some exclusives which are not available elsewhere. Fixed term savings rates
The general rule is the longer you lock up your savings, the better the return you will achieve. However, this should be avoided if you have plans for the money. If you withdraw your funds early, you will pay an early redemption penalty. You can usually achieve a better return at an online savings bank, such as ING Direct. They have lower running costs, so offer savers an improved return.

Why do savings rates change?

New versus existing customers
Financial institutions regularly offer the highest savings rates to new, rather than existing, customers. High interest accounts are used to lure wealthy customers from rival banks. Sadly, many loyal customers continue to leave their money in a current account which yields just 0.1% interest. While this provides flexibility, after inflation, your money is losing value in real terms. Introductory offers
Once a financial institution has attracted new customers with its high savings interest rate, it will be reduced after 12 months. It is all in the T&C's, but most savers do not read them. This enables your bank to make money by encouraging you to use their network of financial advisors. This is why most people are talked into moving their money to stock market-related investments.