How To Search For Increased Interest Rates

Opening a savings account is a rite of passage when you’re younger. I remember opening a HSBC account through my school when I was in year 7 or 8. And going back you’d probably have stuck with the same bank for life (or close to). But in the modern age that has changed. People are far more likely to switch savings and current accounts now. I’ve had about three different current accounts in the past six or so years. Sometimes it’s down to functionality and features from the bank. And sometimes it’s about interest rates and getting the most from your money.

As a nation, we opened a record number of savings accounts at the end of 2022 to take advantage of increasing interest rates. Research by Paragon Bank in February showed that a total of £ 73.5 billion was placed into new savings accounts during the final three months of 2022.

This is because a year ago the Bank of England’s base rate was 0.1% – now it’s 4.25%. Last year I opened a few savings pots through Monzo with interest rates under 1%. But today you can open new accounts with interest at over 4%.

Interest rates of savings pots and accounts

If you have any easy access savings accounts or pots it’s time to check out the interest rates. Any account you have where the money isn’t tied in for a specific amount of time is fair game.

Make a note of the interest rates you’re currently getting and see what the best current offers are out there. You can start by checking savings accounts and pots with the current banking providers you’re with. But don’t be afraid to look at new institutions.

In just a few minutes I withdrew money from my old Monzo savings pots where I was getting less than 1% interest. Then the next day when it cleared in my account I opened a new pot at over 4% interest and put the money back in. I lost absolutely nothing by doing this, but my interest has gone up over 400%.

Check out your ISAs and bonds

It isn’t just savings accounts you should check rates on, do the same thing with your ISAs and bonds. In a cash ISA, savings interest is tax-free. In an ordinary savings account any interest your money makes is taxable- for a basic rate tax-payer any interest you earn from the account over £1,000 will be taxed (£500 if you’re a higher rate taxpayer). But for most of us, this won’t be an issue as you’d need to save a lot to get this amount of interest.

Depending on the type of ISA you have you may not be able to get the money out straight away without a penalty. But anything instant access or not tied in can be changed now. If you’re tied in then make a note of when the term finishes to remind you to shop around. With ISAs you can only open one per tax year so take that into consideration.

The same goes with bonds, check out when your fixed term ends and create a reminder to look at rates when it’s finished.

Getting a bonus for switching your current account

Interest rates don’t tend to affect current accounts as much but it’s worth checking you’re with the best bank for your needs. You may get better digital functionality by changing banks, or there might be a branch local to you.

I wanted to turn my old current account into a joint account as it was the account all of our bills and household stuff came out of, but the bank I was with was going to make it very difficult. So I opened a brand new account with HSBC through the switching process and got the account I wanted.

Plus a lot of accounts will give you a cash bonus for switching. When I made our switch we got £125 for doing so with minimal conditions. The conditions may be staying with them for a certain amount of time, or depositing a certain amount into the account each month.

Thanks to the Current Account Switching Service it’s really easy to switch your current account. By using this option they’ll move over any standing orders and direct debits. They’ll even notify your employer of your change of account.

Have you checked out your interest rates?

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