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Maximise your savings: Look at all the perks

By MoneySupermarket.com  |  Posted: September 14, 2012

Plenty of incentives on offer to savers

Plenty of incentives on offer to savers

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Halifax is poised to hand out prizes totalling £1million to some lucky savers as the first anniversary of its Savers Prize Draw approaches.

For those who have at least £5,000 in savings with the bank, this means there is now the chance of winning one of three prizes of £250,000 in its December draw as part of a total prize pot of £1million.

Since December 2011, Halifax Savers Prize Draw has allocated more than 11,000 prizes to savers totalling over £6million – but it's not the only saving sweetener available on the market.

Santander recently paid more than 600,000 savers an extra 0.1% on their cash as it promised it would in the event that Rory McIlroy won a golfing major. Holders of the bank's Major ISA, which paid 4%, benefited following McIlroy's PGA triumph.

But aside from these, there are plenty of other incentives on offer to savers which are more straightforward, such as bonuses, which boost the rate on your savings account for an introductory period.

That said, if you take advantage of a bonus on your savings account, you will need to keep your wits about you as they only tend to last for 12 months, sending your rate plummeting after that time.

Here we look at how to navigate perks and bonuses in order to wring the most out of your savings.

Easy access accounts with a bonus

Bonuses will vary in size and length, and can make good financial sense, as the rate you are getting on your hard-earned cash can be significantly boosted for an initial period of time.

However, the key is to be savvy and note down when the bonus ends so you remember to move your money in time.

If you don't do this, you could find you are earning a pretty paltry rate on your savings when that bonus drops away.

West Brom building society is paying a market leading 3.06% on its Direct Bonus Account – but you'll need to invest a minimum of £10,000 and the rate you see includes a 1.54% bonus until September 30, 2013.

If you don't have £10,000 to invest, The Post Office is paying 2.95% for a minimum investment of just £1, which includes a 1.30% bonus for 12 months. ING Direct is paying slightly lower rate of 2.90% also for £1, but this includes a sizeable bonus of 2.36% for the first 12 months.

As these rates easily beat those paid on accounts without a bonus, if you are savvy, it is worth taking advantage. However, you must make a diary note to review your account before the bonus period expires as returns will plummet.

Easy access accounts without a bonus

If you don't want the hassle of having to remember to move the money you've got squirrelled away in an easy access account every time a bonus period ends, the alternative is a 'clean rate' account.

These accounts do not include a bonus – so, while they are variable – what you see is what you get.

At present, Saffron building society is paying 2.76% on its e-saver Issue 5 on a minimum investment of £10.

Aldermore is paying 2.75% on its Easy Access Issue 2, but on a higher minimum of £1,000, and Leeds building society is paying the same rate, also on a minimum of £1,000, on its Unlimited Postal Account Issue 2; although this can only be operated by post.

Nottingham building society is paying 2.62% on its eSaver Instant Issue 1; this is a MoneySupermarket exclusive and the rate is paid on a minimum of £500.

Virgin Money pays a very slightly lower rate of 2.60% on its E-Saver Issue 2 provided by Northern Rock on a minimum of £1.

Fixed rate savings accounts

One of the best ways to get the most out of your savings in today's low interest environment is to lock your money away in a fixed rate bond, as these accounts provide some of the best returns available.

But crucially, if you opt for a fixed rate account, you have to be sure you won't need access to your money for the length of the term, as you will be penalised heavily if you need to make withdrawals – and in some cases, won't be permitted at all.

The very highest rates are paid on the accounts which require you to tie your money up for the longest period – say of four or five years. The State Bank of India is currently paying 4.50% on its five-year bond and 4.20% on its four-year bond; both have a minimum investment of £1,000.

Julian Hodge Bank is also paying a competitive 4.00% on its Capital Millennium Bond which is fixed for five years; also on a minimum of £1,000.

The State Bank of India is currently also the "best buy" for three-year fixed rate bonds, paying 3.85% on a minimum of £1,000, while Kent Reliance is paying a competitive 3.75% on its three-year fix on a minimum of £1,000.

If you're only looking to fix for the short term, the Post Office is offering a rate of 3.51% on its Growth Bond Issue 18 fixed for two years on a minimum of £500, while Kent Reliance is paying 3.50% on its two-year fixed rate bond on a minimum of £1,000.

Notice accounts

A further option for savers looking to get a better return on their money is a notice account.

These accounts require you to give notice of your wish to make a withdrawal – often along with details of the amount you want to withdraw.

As with fixed rate bonds, the notice period will vary, typically starting from around 30 days, but rising as high as 120 days, so if you think you might need access to your cash in a hurry, this type of account is not for you. Further, some notice accounts may also come with restrictions on the number of withdrawals you can make in one year, so make sure you scour the small print.

If you can abide by the terms and conditions, you will usually find the rates beat those on easy access accounts, with the best rates offered on those accounts with the longest notice periods.

Kent Reliance is currently paying 3.30% on its Internet 60-Day Notice Issue 2 account on a minimum of £1,000.

Shawbrook is paying 3.30% on its notice account and Aldermore is paying 3.20% on its notice account. Both rates are paid on a minimum of £1,000, but both have a longer notice period of 120 days.

If you want to make a lower minimum investment, the Post Office is paying 3.00% on its Reward Saver on a minimum of £500. The notice on this account is just 30 days, but as the rate includes a bonus of 1.25% for 12 months, again, you need to note down when this ends so you remember to review the account again at that time.

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