Martin Lewis’ urgent savings warning – check now to make sure you’re not missing out on £100s in free cash
MARTIN Lewis issued an urgent savings warning to millions of Brits who have savings or cash ISAs.
The Money Saving Expert revealed that people are being "ripped off" by banks while saving rates are at their highest level for over a decade.
In his newsletter on Tuesday Martin Lewis said millions are missing out hundreds of pounds in interest by banking in low-interest savings accounts.
The Money Saving Expert wrote: "Savings rates are at their highest level for 14 years. No surprise after 11 consecutive UK base rate rises.
"And another is highly touted this Thursday - it's predicted to jump from 4.25% to 4.5% - some of which is likely already factored in to the current rates.
"Yet millions of people have money in savings and cash ISAs, earning far less than 1% - with banks taking advantage of customer inertia. Stop 'em ripping you off. Check yours now".
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The money saving expert then revealed the top saving options available for Brits who want more from their money.
Early-access savings
These are usually the simplest form of savings, which usually allow unlimited cash withdrawals.
However, this perk means they tend to come with lower interest returns.
Martin Lewis listed examples Brits may opt for.
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These include including app-only Chip (3.71% interest rate), Cynergy Bank (3.55% with a one-year 0.34% cent bonus), Post Office (3.47% with unlimited withdrawals, minimum £1), Sainsbury's Bank (3.37%, minimum £1,000), Nationwide (3.2%, minimum £1) and Chase Bank (3.1% on up to £500,000).
Fixed-rate savings
Also known as fixed rate bonds - these offer some of the highest interest rates.
However, if interest rates increase during your term you can't move your money and switch to a better account.
Martin Lewis suggested Atom with their 4.2% interest rate with a minimum of £50 in the account.
Martin Lewis also listed SmartSave (4.87%, minimum £10,000) and Isbank (4.9%, minimum £5,000) via the savings marketplace Raisin or Charter Savings Bank 4.9% AER (min £5,000).
But he warned: "Beware a fixed-rate interest tax trap. If you have a fix, the interest crystallises for tax when you can access it, so some may want it paid monthly so they can spread out the interest over years, rather than get it in one lump which may push you up a tax bracket".
Under the personal savings allowance (PSA), basic-rate taxpayers can earn £1,000 in savings interest (£500 for higher-rate taxpayers) before having to pay any tax.
Cash ISAs
The money saving expert said that although cash ISA rates are up, they still pay less than normal savings, so are only best for bigger savers who pay, or may in future pay, tax on interest.
He suggests that Brits with a cash ISA check what they earn now - even if they're fixed.
Martin Lewis then went on to name the top cash ISAs for the biggest saving Brits.
For easy-access he listed Cynergy Bank (3.5%) in the number one spot, with a minimum of £1 in the account, tax-free savings, 25/7 withdrawals and transfers-in accepted at the time of application.
For a one-year fix, Martin Lewis named Secure Trust Bank (4.3%), with a minimum of £1,000 initial investment, and the ability to save up to £20,000.
And for a two-year fix, he suggest Newcastle BS (4.4%), with a minimum of £500, tax-free savings and withdrawals permitted subject to 120 days loss of interest.
However, the MoneySavingExpert suggests: "If your existing cash ISA earns less, most of the above allow you to transfer them in.
"To do this, just apply for a new cash ISA, and as part of the application you'll be asked if you want to transfer your existing cash ISA over (don't just withdraw cash to move it, then it loses its 'cash ISA' status)".
If you find yourself locked into a poorly-paying fixed cash ISA, Martin Lewis suggests paying the penalty to withdraw your money and place it elsewhere.
How can I find the best savings accounts?
With your current savings rate in mind, don't waste time looking at individual banking sites to compare rates - it'll take you an eternity.
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Research websites like MoneyFacts and price comparison websites such as Compare the Market, Go Compare and MoneySupermarket will help save you time and show you the best rates available.
These sites let you tailor your searches to an account type that suits you.