4 key factors for efficient saving

As the Office for National Statistics releases new figures revealing that Brits are becoming increasingly prudent in their spending habits and investing more in saving, we take a quick look at the key factors to consider before selecting the best savings accounts to meet your needs.

There are a huge number of investment and saving products on the market, but in order to get the most out of your cash you need to evaluate four key factors: funds available, investment term, required access and acceptable risk. These will play a huge role in estimating the best return available and help establish which products meet your own unique economic situation and expectations.

Funds available
The main deciding vote for products here is whether you have a lump sum to invest or are rather looking at regular payments. For best results on a lump sum, products such as saving bonds and cash ISA transfers work really well. If you’re starting from scratch you’ll be looking to make regular payments, in which case a new cash ISA can take up to £5,100 tax free every year, or a high interest savings account allows savers to make regular payments and offers an above average rate of return.

Investment term
Essentially the longer you tie up your money, the better the rate of return offered. So if you’re happy to have your investment sitting pretty, accumulating interest in the depths of a financial product, you’ll do well to opt for a long-term high interest account or investment ISA. If the investment required is short-term, cash ISA’s offer excellent tax-free annual returns.

Required access
If you need to dip in and out of the savings pot, there are suitable products on the market that allow short or no notice withdrawals. For best results shop around for individual products, comparing minimum required deposit and ensuring that there are no penalties for withdrawals. However, for savers who are happy to follow the rules of ‘out of sight, out of mind’, products that limit access, such as high interest accounts that allow only one annual withdrawal, often offer better rates.

Acceptable risk
Your position both pre and post global recession will no doubt dictate how much risk you are prepared to accept, however there are different levels of risk - investment ISA’s and investment bonds run with the markets, whilst options such as savings bonds and high interest accounts offer fixed rate solutions.

Sarah Maple writes about the best savings accounts and fixed rate bonds.

Can I Afford a Gap Year?

Much has been written recently about the cost of university, and the increasing number of young people put off by higher education due to the thought of so much debt after graduation. However, as the new term kicks off this month, it is clear that the recession has made the application process even more competitive as more mature students enrol, at the same time as jobs are cut, pay is frozen and more people find themselves without work. So what are the other options after college or sixth form?

Of course, a gap year has long been an acceptable way to spend time after secondary school in order to build up your 'life experience' and to enjoy some well-deserved freedom. But with so much concern about debt, can you really afford one? The easy answer is probably yes, but you must plan and budget carefully.

Whether you decide to volunteer close to home, or want to fly to the east coast of Australia, it is likely that you will need to save up some money for the experience. Of course, earning is one thing, but saving is quite another and it is important that you are taking enough money from your monthly pay and putting it somewhere safe. The more research you can do on this at the moment the better as the best savings accounts available tend to be fixed term - meaning you are more likely to get good returns if you leave your savings alone for a certain amount of time.

Another positive boon to your funding could come from tax. If you are only working for a few months before leaving and not working for the rest of the year, you may be eligible for tax back. If you earn £6,475 or less over a year you do not need to pay tax.

Once your funds are in place you need to estimate how you want to access it, and the currency (or currencies) you are likely to use. Internet banking is a great way for travellers because it is free and is available 24 hours a day. After you know what currency you will need and where, it may also be worth considering a prepaid credit card - despite the bad reputation there are certain credit card options available that are free of debt risk and allow you to take out foreign currencies abroad for no charge.

The next plan is to budget the trip. If you are travelling abroad it is becoming increasingly important to take out travel insurance - and it is a good idea to research specialist gap year cover. If you are planning any special activities such as extreme sports, ensure that these are included on your policy also.

Paul Roberts writes about finance for travellers, savings accounts and fixed term savings

How to Ensure Your Savings are Safe

With so much turmoil in the banking sector over the past few months, savers are feeling justifiably jittery about the safety of their hard-earned cash – but just how safe are their savings?

Many are nervous about putting their faith in savings institutions, having had their fingers burned by the collapse of the likes of Northern Rock and the Icelandic banks. And while things seemed to have settled down a little of late, there are no absolute guarantees that other banks won't go the same way.

Are my savings protected?

The good news is, if you have your savings with a UK bank authorised by financial watchdog, the Financial Services Authority (FSA), you will have protection under the UK's Financial Services Compensation Scheme (FSCS). This is the official safety net for customers of financial firms that go bust, and guarantees your savings up to a limit of £50,000 - or £100,000 for a joint account.

Don't keep all your eggs in one basket



When checking the safety of your cash, you need to note that the FSCS level of protection applies per person, per authorised institution - and not per account. This means that if you have more than £50,000 with any one bank, you need to spread your money around between different providers.

You also need to beware that some institutions offer accounts under a number of brand names or subsidiaries which are all trading arms of the same authorised institution. If there is a single registration for the entire group, your compensation is limited to a total of £50,000 protection across all of its brands.

Some examples

HBOS, for example, operates savings accounts under the Halifax, Bank of Scotland, Birmingham Midshires and Intelligent Finance brands. However, all HBOS brands operate under a single FSA authorisation, so if you have £30,000 savings with the Halifax and £30,000 with Intelligent Finance, only £50,000 of the £60,000 total would be guaranteed.

In contrast, the UK banks owned by Santander are operating under two authorisations - one covers Abbey and B&B, and the other covers A&L. This means savers are covered for up to £50,000 across Abbey and B&B, and are also covered for a further £50,000 with A&L - but be warned that this could change from the middle of next year.

You can find more information on who owns who in this FSA download.

More info found here

Home Insurance Fraud: Don’t Be Lured to the Darkside

When the going gets tough, the tough sometimes get fraudulent. Recent figures released by the ABI (Association of British Insurers) have shown a record level of fraudulent insurance claims, proving people are willing to use their insurance policies as a way of bringing in extra cash.

According to statistics, 2000 fraudulent claims are made every week, amounting to an estimated value of £14 million.

What is insurance fraud?

If you make an insurance claim for something that either hasn’t happened, or you know to be wrong, you’re committing insurance fraud.

How much fraud is there?

The most common form of fraudulent claims is for home insurance - 55,400 frauds were detected last year at an estimated value of £110 million.

Why are there so many claims?

There are more opportunities for fraudulent home insurance claims than for any other class of insurance.

Car insurance fraud, for example, requires a little planning to orchestrate a convincing accident or theft. However, spilling paint on your sofa in order to get a new three-piece suite, is much easier.

Who’s guilty of insurance fraud?

A YouGov survey of 3000 adults, showed one-in-five admitted they’d be tempted to cheat on their insurance - despite the likelihood of getting caught.

But if you think cheating’s a quick way to boost your bank account, think again – the insurance inspectors will be after you!

The crackdown on fraudsters

“Fraud thrives in a recession, so insurers are intensifying their crackdown on insurance cheats,” says Nick Starling, ABI’s Director of General Insurance and Health, on the ABI website.

Claimants may have to provide minute detail, and may even find forensic experts getting involved, all in an effort to stem the tide of fraudulent claims. And if found out, fraudsters may be blacklisted by insurers, or may even gain a criminal record.

Fraud makes home insurance more expensive

Cracking down also prevents honest policyholders paying the price.

“Fraud adds an extra £40 a year to the average premium,” says Starling, “which is why the harder we make it for the cheats, the more competitive premiums will be for honest customers.”

For more information on home cover, read Confused.com’s Home Insurance Buyer’s Guide.

Sourced from http://www.confused.com/featured-articles/household/home-insurance/home-insurance-fraud-don-t-be-lured-to-the-darkside-3540983065

The 6 Big Reasons to Switch Energy Providers

Now that all of the ‘big six’ energy companies have cut their prices, here are six reasons why right now could be a great time to switch.

nPower’s recent energy rate cut – 7.5% for electricity customers – means that all the major UK suppliers have dropped their prices since the start of 2009. So if you’re with nPower, British Gas, EDF, E.ON, ScottishPower, or Scottish & Southern then your bills could be about to drop – but only if you’re on the right tariff.

Finding a cheaper tariff is easy these days with the energy comparison sites. Enter a few details into simple online forms and you’ll see all your local energy options appear onscreen within seconds. And if like most energy customers you haven’t switched in a while, there’s a very good chance you can slash your energy bills by even more than the announced cuts.

For many, the chance to save up to £252* on their gas and electricity bill is all the reason they need to switch energy provider, but just in case one reason’s not enough, here are…

…The Big 6 Reasons to Switch Right Now

1. Save up to £252*
nPower, British Gas, EDF, E.ON, ScottishPower and Scottish & Southern have announced rate cuts, but some have cut more than others. Therefore, even if you're with one of these providers you could save even more by switching.

2. Lower your standards
If you're on a standard tariff then you're almost certainly paying too much. Don't believe us? Then compare energy prices right now to see what you could be paying.

3. Get online!
You could further increase savings by signing up to an online tariff. Posting bills and waiting for cheques to clear costs energy providers time and money, and they're willing to offer discounts if you agree to paperless billing and paying by direct debit.

4. Colder weather = more savings
Summer is still a way off, and as people use more energy during the colder months, switching to a cheaper tariff now means you'll save even more.

5. FREE smart meter
If you switch to a First:Utility tariff, they’ll install a smart meter for free. Ofgem want to have a smart meter in every household by 2020, so here’s your chance to beat the deadline by a dozen years. Plus, monitoring your energy consumption more closely means you could save as much as 15%** off future bills.

So now you’ve read our big six reasons to switch energy supplier, you’ll probably want to get straight to it, in which case, just follow the link below to see how much you could save.

Confused.com’s Guide to Safe Savings

Top tips on how to keep your money safe. These are worrying times for savers. Not only have interest rates fallen to record lows, slashing the returns people can earn on their money, but there have also been a number of high profile banking collapses.

Unsurprisingly, many consumers have been left wondering if they wouldn’t be better off stuffing their savings under their mattress.

But, by following a few simple rules, people can easily keep their money safe, while still earning a decent return on their savings at the same time. Just follow Confused.com’s top tips…

The savings safety net

The good news for savers is that the UK has a savings safety net, known as the Financial Services Compensation Scheme (FSCS). The scheme will pay compensation of up to £50,000 to single account holders who have lost money as a result of a bank or building society going under, and up to £100,000 for joint accounts. The scheme currently pays out within three months, and there is talk of speeding this up to as quickly as seven days.

Banks versus brands

However, things can get a bit complicated. The FSCS will only guarantee up to £50,000 or £100,000 per banking licence and not per brand. As a result, those who have more than this amount in savings with different brands - which are part of the same banking group - could still lose out if their bank goes bust. It’s therefore important to ensure that your money is spread around different banking groups and not just different brands.

Things have been made particularly complex by the recent wave of consolidation in the banking industry. For example, Lloyds TSB and HBOS are now part of the same banking group, but continue to trade under different banking licences, meaning they have separate compensation limits under the FSCS. But Halifax, Bank of Scotland, Birmingham Midshires and Intelligent Finance all trade under the same licence.
Similarly, Abbey, Bradford & Bingley and cahoot are under the same licence, while Alliance & Leicester is under a different one, although they’re all owned by Spanish banking giant Santander.

Government Guarantees

For people who are worried about the safety of their cash, there are a number of institutions that have government guarantees.

National Savings and Investments is backed by the UK Treasury, which sees the group boasting that it’s 100% secure, while Northern Rock has also been nationalised – making it similarly secure.
All money invested in Irish banks is guaranteed by the Irish government, including money that is held in the UK arms of Irish institutions. As a result, the Irish government guarantees any money held in Post Office savings accounts, as the accounts are provided through a joint venture with the Bank of Ireland.

5 top tips to keep your money safe

1. Spread your cash around. Even if you don’t have more than £50,000 worth of savings, it’s still worth holding it with different institutions, just in case the worst happens, and you’re left without your money while you wait for the FSCS to pay out.
   
   
2. Check your savings provider is covered by the FSCS or a similar foreign scheme. All savings providers, authorised by the Financial Services Authority in the UK, are covered by the FSCS. Some foreign providers may also be covered by the scheme, while others will just be covered by their home country’s scheme, which in some cases could pay out less than the FSCS.
   
   
3. Make sure you know who would refund your money if things went wrong and how much you’d get back. The easiest way of establishing this is to simply ask your bank.
   
   
4. Make the most of the security offered by government-backed institutions.
   
   
5. Take advantage of the savings guarantees being offered by the Irish government.

While it’s important to keep your money safe, savers should still try to get the best returns on their cash. Compare savings with Confused.com to make sure your money is working hard for you.

Sourced from Confused.com [Link]