Make the most of your savings
But with savings rates only hovering above base rate, it's more important than ever to ensure your savings are earning as much they can.
Choose your weapon
Consider whether you're happy to lock away your money in return for better rates, or if you think you'll need quick access to it at any point. The best easy-access accounts – which allow you to dip into your savings whenever you need them – are currently paying around 2%.
Many include bonus rates for the first year, so you will have to move your money before the rate drops. Better rates are available with fixed rate accounts – the longer you tie your money up, the more your money will earn.
Use your allowance
Follow the golden rule of savings and make use of your ISA allowance, which for the new tax year is £11,520, half of which can be invested in a cash ISA. Holding money in an ISA means you will not pay tax on your interest or when you cash it in. You can also choose from instant-access, notice and fixed-rate accounts.
Set your sights
Having goals is an incredibly effective way of boosting your savings. According to NS&I's survey, savers with goals put away £39 more a month on average. So whether it's for a new car, home improvements or just a rainy day, set yourself a target and it will motivate you to put more away each month.
Who are the FCA?
The Financial Services Authority - which has been the regulator of financial services in the UK since 1997 – has been replaced by two new regulatory bodies, the Financial Conduct Authority and the Prudential Regulation Authority.
Here's what you need to know.
Who will be regulating the financial services I buy?
The FCA will supervise 26,000 firms that sell financial services and offer advice to consumers. it has a remit to ensure consumers are protected and to promote competition between providers. it will have the power to intervene when companies treat customers unfairly and force them to pay compensation.
However, complaints and compensation claims will still be handled by the Financial Ombudsman Service. For guidance on financial products and scams, visit the FCA's website (fca.org.uk) or call 0800 111 6768.
What about the prudential regulatory Authority (PRA)?
The PRA will ensure the 1,700 banks and insurance companies it supervises have sufficient capital and liquidity to cope with any shocks that come their way. Struggling firms should also be able to fail without unsettling wider markets or calling on taxpayer help. The PRA is a part of the Bank of England.
Will I notice any difference?
Probably not. Martin Wheatley a former managing director of the FSA is heading up the FCA, while former FSA chief Hector Sants is running the PRA. Some would say the transition from FSA to FCA is literally just a change of middle initial.
However, with new powers to ban the sale of products it deems unsafe for consumers, the FCA appears to have more teeth than its predecessor.
There are limits to how much you can invest in any tax year. For 2011/12, the limit is £10,680. Of that, the maximum you can invest in cash is £5,340 and the balance of £5,340 can be invested in shares (individual company shares or investment funds). If you don’t take the cash ISA allowance, you can invest up to £10,680 into a stocks and shares ISA.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
Also referred to as the bank rate or the minimum lending rate, the Bank of England base rate is the lowest rate the Bank uses to discount bills of exchange. This affects consumers as it is used by mainstream lenders and banks as the basis for calculating interest rates on mortgages, loans and savings.
The Financial Services Authority is an independent non-governmental body, given a wide range of rule-making, investigatory and enforcement powers in order to meet its four statutory objectives: market confidence (maintaining confidence in the UK financial system), financial stability, consumer protection and the reduction of financial crime. The FSA receives no government funding and is funded entirely by the firms it regulates, but is accountable to the Treasury and, ultimately, parliament.