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Five tips to boost the returns on your cash savings

Making more of your savings could be easier than you think with these top tips.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Everyone needs cash, it’s vital to cover day-to-day expenses and unexpected costs like a leaky roof or broken boiler.

But many people neglect their cash, especially their savings, and potentially lose out on hundreds of pounds in interest each year. Below we highlight five simple tips for savers looking to improve their cash returns. Remember this article isn’t personal advice and inflation will reduce the value of money over time.

1. Check your rates

It might sound obvious, but it’s worth checking what rate you’re currently getting on your savings. Almost half of HL's easy access account savers don’t know what rate they’re getting so if you aren’t sure you’re not alone.

But you don’t need to settle for a poor rate. The average instant access account pays just 0.41%, but through Active Savings you could get better easy access rates than in the market, roughly three times more.

Please note instant access savings accounts from high street banks typically allow you to instantly withdraw your money at any time, with Active Savings withdrawals usually take up to one working day.

2. Watch out for bonus rates

Some banks will offer a 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 which offer bonus rates, but you do need to treat them with caution. As we’ve already seen, it’s easy to lose track of what rate you’re getting and end up on a pretty miserable rate when the bonus rate matures.

So unless you know you’re going to proactively move your money on a regular basis, it might be worth looking at accounts which pay a slightly lower headline rate, but which don’t have a bonus and just pay a good consistent rate.

3. Make the most of your personal savings allowance

Introduced in April 2016, the personal savings allowance (PSA) allows many people to earn up to £1,000 of tax-free interest each year before they pay any tax. So, for example, a basic rate tax payer with £100,000 in savings earning 1% annually won’t have to pay any tax on their interest.

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

It’s also worth remembering 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.

Please note the personal savings allowance is calculated using UK, not Scottish, income tax bands. Tax rules can change and benefits depend on personal circumstances.

4. Get your savings in a fix

For money you don’t need to access immediately, but don’t want to invest for the long term, fixed-term savings 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. For example, you can currently get as much as 2.20% AER/Gross* on a 2 year fix, but remember you can't usually access your money until the end of the fixed term.

5. Create a savings portfolio

For many savers a good strategy is to create a savings portfolio. This is where you split your cash across easy access savings and fixed terms.

Find out more about savings strategies

Make more of your cash with Active Savings

If you’re looking to make more of your cash savings our new Active Savings service could be the answer. It lets you pick and mix easy access and fixed-term savings 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) shows what the interest rate would be if interest was paid and compounded once each year. It helps you compare the interest rates on different savings products.

Gross means the interest rate without any tax deducted. Interest is paid gross. You are responsible for paying any tax due on interest that exceeds your Personal Savings Allowance to HM Revenue & Customs.

Expected profit rate – Islamic banks offer an expected profit rate, rather than interest on their savings products, in order to comply with Sharia banking principles.

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 Payment Services Regulations 2017 with firm reference 751996 for the provision of payment services. Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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