Five Ways You Can Earn More Interest On Your Money
We all want our money to work hard for us. And gaining interest is a great way of making your money work even harder. For those who are super-wealthy the difference between money earning interest or not can be thousands of pounds. So it really makes a difference, But how do you earn more interest on your money?
Current and savings accounts
I’m going to start with where most people tend to keep their money, but it’s actually the worst place to keep yours if you want interest. Especially as interest rates are at a low currently. The inflation rate is currently around 0.7% so if your current or savings account pays less than that then your money is losing value. It’s worth shopping around for accounts, look at places offering perks like cash to switch or vouchers for opening an account. Even if you don’t earn more interest you can make some extra cash up front.
Earn more interest on your money through cash ISA’s
ISA’s are a great way to earn a bit extra from your money without the need to tie in it. You can hold up to £20,000 a year in an ISA before paying tax, and you open one ISA per financial year. If you have more than one ISA the £20K limit is across all of your ISA’s. There are loads of different options depending on your situation. You can open an instant access ISA if you need easy access to your money, but they will have lower interest rates. But if you don’t need to access the money for a while you can tie it in for a certain number of years. This way you can earn more interest on money that’s otherwise just sitting there.
Earn more interest through investing
Stocks & Shares ISA’s
I spoke about ISA’s above, but another type of ISA is a Stocks & Shares ISA. This is a great option if you’re looking to lock your savings away for a longer period of time, 5+ years minimum, but ideally 10+ years. You don’t need to know much about investing to use a S&S ISA because plenty of accounts have ‘Robo-advisers’ and the process is really simple. All you have to do is choose how risky you want to be and then the account will do it for you. You don’t need much to open, but by opening a Stocks & Shares ISA you’re giving yourself a good chance of both making money through your investments, and also taking advantage of compound interest leaving your money away for longer. So it will earn more interest!
Investment funds
Earn more interest through peer-to-peer lending
Another way you can get a bit more interest is to lend your money to people and businesses through peer-to-peer lending. This tends to offer interest rates up to 6.5% and can be a great option if your money is just sitting around. Zopa is the oldest peer-to-peer investor in the UK with projected returns of up to 5.3% per year. A Funding Circle is another option with potential returns up to 6.5%. To do this you need to invest a minimum of £1,000 and you get an Innovative Finance ISA. So much like other ISA’s, you can deposit up to 20K per tax year and your returns will be free from income tax.
One thing that’s worth bearing in mind is your money isn’t covered by the Financial Services Compensation Scheme (FSCS) if someone fails to pay back the money you owe. So if a company goes bust then you may not get your money back.
How do you get your money to earn more interest?
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14 responses to “Five Ways You Can Earn More Interest On Your Money”
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Rhian Westbury
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I need to look at opening an ISA again. I only have my current account at the moment. My children have savings accounts with Nationwide and I must say the interest is pretty good.
That’s amazing that their savings account have good interest x
I’ve not heard of Zopa before so will definitely be looking at that as their interest rate is so much more higher
I must confess that I am one of those women who allows the husband the bulk of this responsibility.
These are some solid tips. I already implement 3 of them. In today’s unstable world from a financial standpoint, it’s important to take every advantage of your money making money.
That’s great you’re taking advantage of 3 of them already x
This pandemic is so hard to find a work and making money. This blog will help us. Those tips you have mentioned are really amazing. Thanks for sharing
Great ideas here to get starting…I know a lot of people will find this helpful. Thanks for sharing!
My pleasure, hope it helps x
Great insights on investments. I have been looking for was to increase my savings but it frustrates me everytime. Thanks so much for sharing this it gave me a whole different perrspective.
Cash ISA! I’ve never heard of that before, I need to know more about it, I will ask my bank tomorrow.
Thanks these are really useful tips and I really need to be making more with the little bit of savings I have
Laura x
Thanks, this is so useful as my son is about to turn 18 and the bank will turn his saver account to an adult one, meaning he drops 2.4% in interest, so we need to find another solution.
I had no idea there were so many ways of earning interest, I need to take out another ISA and be more savvy.