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  • Tips to help you save

    Everyone needs cash, it’s vital to cover day-to-day expenses and unexpected costs. But having it sat earning little-to-no interest is a sure way to let rising prices eat away at its value. If you’re looking for an easy way to improve your cash returns, here are our five top tips.

    Important information

    This article gives you information to help you make the most of your money, but it isn’t personal advice. If you’re not sure if a certain action is right for you, please ask for advice.

    Important information - This article gives you information to help you make the most of your money, but it isn’t personal advice. If you’re not sure if a certain action is right for you, please ask for advice.

    Five tips to help you improve returns on cash

    1. Check your savings rates

    It’s worth checking what rate you’re currently getting on your cash savings. If you’re getting a poor rate, you don’t need to settle for it.

    Most of our savings are held in instant and easy access products, where the rate is usually variable. This means it can go up but it may also have gone down since you took out the product.

    The average instant access rate is just 0.09% (31 August 2021), but you may be getting even less – most high street banks and NS&I offer just 0.01% AER/Gross* on some instant access accounts.

    There are much better rates available on the market. You can get a better easy access savings rate through our service, Active Savings.

    Instant access savings accounts from high street banks and building societies typically let you instantly withdraw your money at any time. With Active Savings, withdrawals from the easy access products usually take up to one working day.

    Waiting for a great rate? Sign up to our alerts and you’ll be one of the first to know when a competitive rate gets added to Active Savings. You can even choose which type of products you’re interested in.

    Sign up to alerts

    2. Watch out for bonus rates

    Some banks will offer an introductory bonus rate when you sign up for a new account. This will usually be available for a period of up to a year, after which the bonus will end and your rate will drop.

    You shouldn’t automatically discount savings products which offer bonus rates, but you do need to treat them with caution.

    Unless you know you’re going to move your money on a regular basis, it might be worth looking at accounts which pay a slightly lower headline rate, which don’t have a bonus.

    3. Get your savings in a fix

    For money you don’t need to access immediately, but don’t want to invest for the longer term, fixed-term savings products could be the answer to improving your returns.

    You can normally fix for anything from three months up to five years, and the longer you fix for, the higher the interest rate usually is. And you’ll get a guaranteed interest rate for the duration of the product, so it won’t change. But remember you can't usually access your money until the end of the fixed term.

    Before tying up your money, we recommend having at least 3 – 6 months’ worth of essential expenses in an account you can access easily as an emergency fund.

    Read more about emergency savings

    4. Save tax-efficiently

    The savings accounts you choose can affect the amount you’ll be taxed. The following information is correct for the 2021/2022 tax year.

    If you save outside of an ISA, the personal savings allowance (PSA) may apply. Introduced in April 2016, the PSA lets non- and basic-rate taxpayers earn up to £1,000 of interest each tax year before they pay any tax.

    The PSA drops to £500 for higher-rate taxpayers and additional-rate taxpayers don’t get a PSA at all. Nonetheless the PSA means that lots of savers don’t have to worry about paying any tax on their savings interest.

    Remember if you’re married or in a civil partnership you could split your savings with your spouse to effectively have a combined PSA of up to £2,000.

    The personal savings allowance is calculated using rest of UK, not Scottish, income tax bands.

    If your non-savings income is less than £17,570 you may be able to earn more in interest before you pay any tax on it. This is called the starting rate for savings.

    Read more about tax on savings interest

    A Cash ISA is a tax-efficient way of saving. Any interest you earn in a Cash ISA is not subject to UK income tax and doesn’t need to be declared on a tax return. But there are limits to how much you can add to ISAs each tax year.

    Find out more about the HL Cash ISA

    Tax rules can change and benefits depend on personal circumstances.

    5. Become a savvy saver by laddering your cash

    Think about putting money in fixed-term products starting at different times, or with different end dates.

    You’ll probably get a much better rate overall that if you left the whole amount in an instant access account, and you can time your cash to come back when you think you’ll need it.

    Make more of your cash with Active Savings

    If you’re looking to build your savings, Active Savings could help.

    Pick and mix easy access and fixed term savings products from a range of different banks and building societies, all through the convenience of one online account.

    And once you’re set up you can move your money around with just a few clicks. There are no forms, no paperwork and no hidden surprises. Just simple, fair saving so you always know what rates you’re getting.

    Discover Active Savings

    * AER (Annual Equivalent Rate) – AER shows what the interest rate/expected profit rate would be if it was paid and compounded once each year. It helps you compare the rates on different savings products.

    Gross – the interest rate without any tax removed. Interest/profits are paid gross. You are responsible for paying any tax due on interest/profits that exceed your Personal Savings Allowance to HM Revenue & Customs. Tax treatment can change.

    This website is issued by Hargreaves Lansdown Asset Management Limited (company number 1896481), which is authorised and regulated by the Financial Conduct Authority with firm reference 115248.

    The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money. Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).

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