How to Make the Most of Your Savings

Image courtesy of taxrebate.org,uk
Image courtesy of taxrebate.org,uk
With interest rates still at record lows, it can be really hard to know where to put your money to get the best return. Many savings accounts offer extremely low rates and it can be really difficult knowing how to get a good return. Below are some tips on how you could get a better return.

Use a notice account
A notice account requires you to give a certain amount of days’ notice before you can make a withdrawal. This could be a month it could be four months. Usually the longer the notice period the higher the interest rate will be. You can normally withdraw the money without giving the required notice but pay a penalty for doing so in the form of lost interest. These can therefore be useful for chunks of money that you do not think that you will need to spend for a long while.

Find a fixed rate
Sometimes a fixed rate account can be better than a variable one. This is often because you have to keep the money in the account for a certain term. Perhaps like a one year bond, where you need to keep the money in the account for a full year in order to get anything back. It is worth looking at the interest rate on accounts like this and comparing it with other savings accounts to see whether it is worth it. It is hard to predict whether the interest rate will remain competitive for the full term of the loan, you will need to make a calculated decision.

Pay off debts
It can be better to pay off debts than save money. This is because the cost of debts can often be higher than the return that you can get on savings. It is therefore worth considering the debts that you may have and seeing whether it is better to pay these. Things like overdrafts and credit cards usually tend to be very expensive and worth paying off, whereas mortgages tend to have a lower interest rate in some cases and it may not be worth overpaying. You have to also consider that paying loans back early could incur charges and you need to find out what those are and incorporate them into your calculations when working out whether it is worth paying back the debt or not.

Take more risk
If you are prepared to take more risk, then you are likely to get a better return on your money. This means that you will need to move form save savings accounts to more risky investments. The more risk that you are prepared to take, the better return you could potentially get but there is also a risk that you could lose some of all of the money invested. In some investments you may even have to pay out more than you originally invested. Therefore if you choose to do this sort of thing you need to do a lot of research first.

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Rachel Henderson is a professional freelance writer from the UK. She writes on many subjects but specialises in personal finance. As well as contributing to various blogs and websites she has her own website tracking her own money making process http://www.turnonepoundintoonemillion.com and sells her books through http://www.bowbridgepublishing.com.

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