Three ways to get the best returns from your savings

26 April 2012


Cash ISAs are a good first stop. Rates can be slightly higher than on comparable savings accounts but the main benefit is their tax-free status.

With no tax to pay, basic-rate taxpayers get 25% more interest than in an equivalent taxable account, while higher-rate taxpayers get 66% more.

Check out this week's best cash ISA rates


Once you've used up your ISA allowance, look for special deals. Some banks offer enhanced rate savings products if you're a current account customer, or you could pick an account with an interest rate enhancing bonus. With the latter though, keep an eye out for when the deals end as the rate can shrivel.

For more, have a look at the best savings rates for the week


An offset mortgage can also be a good home for your savings. Although you won't receive any interest, your savings will be used to reduce the size of your debt.

Effectively, this means they earn tax-free interest at your mortgage rate. Evolve Financial Planning's Jason Witcombe endorses this debt reduction strategy.

"How effective it is will depend on the interest rate on the mortgage," he says. "If you're lucky enough to have a low rate you may still be better off with a separate savings product. Do the maths, and always consider paying down debt of any sort if the interest rate on it is higher than you'd achieve through a savings product."

The best mortgage rates on the market

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