Savers in Ireland continue to miss out on maximising the return on their savings

Derek Keogh, Head of Personal Savings at Anglo Irish Bank discusses recent official data which shows that the majority of savers lose out by not taking action to switch their savings from low rate payers.


Choosing the right account for you isn’t always a straight forward decision. There’s so much choice on the market and accounts can vary widely. However, doing something is better than doing nothing as the potential to greatly increase interest returns exists. Derek Keogh from Anglo Irish Bank answers some of the most frequently asked questions by savers regarding savings accounts:

“Given the wide range of products available in the market paying rates of up to 3.5% gross/AER fixed compared to low average rate that savers are actually earning (0.63% gross/AER variable for overnight / demand funds according to the Central Bank of Ireland’s latest statistics)”, Mr Keogh comments. “For the average saver, with €20,000 on deposit they could be earning over €500 more gross interest based on taking action to move from the low rate account.”

To ensure savers are comparing like-for-like, they should be familiar with the following terms as part of the comparison process:

Gross
This term generally means before deductions, when banks are promoting their products you will often see the interest rate followed by the term “gross”. This will generally mean the rate of interest earned on a deposit account for the duration and before the deduction of tax.

AER
This shows you what the interest on a savings account would be if the interest was compounded and paid out to you each year (instead of monthly or over any other period). You may earn less than the AER because your money may not be invested for as long as a year. Sometimes firms use Compound Annual Rate (CAR) instead of AER on savings and investment products.

Fixed Rate / Term Accounts
With fixed-term deposits you put money into your account for an agreed amount of time. Usually the interest rate is fixed for that period and if you take money out during that time you may pay a penalty.

Variable Rate Accounts
Variable rates rise and fall in line with general interest rate changes in the euro zone. Variable rates offer the most flexibility (over fixed rates) and allow you to withdraw part or all of your funds without having to pay any fees or penalties.

Notice Accounts
This is a savings account on which the customer is contracted to give a specified notice period before making a withdrawal. A penalty may be imposed by the bank providing the account if a withdrawal is made prior to or without the agreed notice period being undertaken.


The material contained in this article is for general information purposes only and does not constitute investment advice or an offer to buy or sell or a solicitation of any investment products or other financial product or service. You should not act or refrain from acting on the basis of any material contained in this article without seeking appropriate professional advice. All information is provided “as is” and without warranties express or implied and Anglo Irish Bank Corporation Limited accepts no liability whatsoever for any inaccuracies, errors, omissions, opinions or misleading information or for any action taken or not taken in reliance on the information in this message. Any expressions of opinion are current opinions as at the date of publication and are subject to change without notice.


Anglo Irish Bank Corporation Limited is regulated by the Financial Regulator in Ireland.



News update released by:


Group Marketing and Communications
Anglo Irish Bank Corporation Limited
Stephens Court
18/21 St. Stephens Green
Dublin 2
enquiries@angloirishbank.ie
+ 353 1 6162000
http://www.angloirishbank.ie

It's Official - The UK Public Are Getting Cleverer With Their Cash

It would likely be surprising to few, but positive aspects of the ongoing recession are rarely mentioned in the press, in comment columns or on blogs. Yet, recent research from financial experts Moneynet and The Office for National Statistics has drawn attention to trends amongst the UK public showing that since the credit crunch we have become more sensible with our money.

Data recently published by the Office of National Statistics has shown that the household saving ratio has increased from 3.9 percent at the beginning of the year, to 5.6 during the second quarter. The rise has caused Andrew Haggar of Moneynet to comment: "People are now getting a bit wiser with their cash, putting it away to cover emergencies or unforeseen events such as unemployment."

Although the credit crunch and ongoing recession has seemed to make the UK public more conscious of the need to save, and to be more sensible with their cash, the competitiveness of fixed rate savings accounts have also been a direct influence on the habits of savers and spenders.

For example, interest on fixed rate bonds has increased from 2.87 percent to 3.53 percent according to moneyfacts. In comparison to average easy access accounts, the highest return on the best bond rates are around 2 percent more. Simply put, for anyone to make any interest out of their cash, they have little choice but to part with that money for a significant amount of time.

Similarly, ISAs have also hit the news again after new rules for over 50s were introduced in order to allow them to save more money tax free. Yet, despite the increase in options for older savers, competitive rates are still being seen by a range of providers with some banks offering accounts to savers both over and under 50. Prospective savers are becoming more savvy with the type of accounts they are opting for, but they are also willing to invest more time researching providers on and offline in order to get the best rates.

Paul Roberts writes about savings accounts, fixed rate savings, bonds and ISAs.

Savings 2009 - Can Debt Still Be a Friend?

As the era of tight budgets and scraping just enough to save continues, the notion that debt is a positive thing may seem ridiculous to many - it should be avoided at all costs, and it certainly shouldn't be available to someone who is likely not to earn enough to pay it back.

Yet, if debt wasn't as available as it is - i.e. if it were capped, what would happen when we really needed it? Most of us are paid by the month, and if at some point you need to make an emergency payment, on your car, or on your property etc, acquiring the capital to pay immediately is an absolute life-saver - and if for some reason it wasn't accessible could be potentially disastrous.

Thankfully, huge emergency payments are few and far between, but seeing as I'm writing this as thousands of university students invest a good chunk of their student loan in a Fresher's Week binge (I know I did), student debt is certainly worth a mention. Tom Cockreill (quoted in The Guardian) has the following to say about this: "Society seems to be happy to let debt accumulation start at university. It's all the more dispiriting that higher education, the bedrock of future prosperity and a more secure society, is paid for via debt."

This is certainly a curious aspect of modern day living. But would further education be as open and equal as it is if the system were not run this way? And additionally, what better time is there in one's life to come to terms with such an expensive, and important, investment - when they are enthusiastic and ripe for learning?

That said, it seems that for people of all ages there is still room for learning how to contribute to making their society less indebted - and it is going to be more difficult for borrowers to simply borrow to much in the future.

Perhaps more transparency is owed to students regarding how much they are paying and borrowing for university - and how much their course and grades are really going to be worth in the future if they achieve the best they can do so. But for those who are borrowing for other products, i.e. desirables, capping may be a good idea - at least to ensure that we are as a society are in control of debt - and it is no longer in control of us.

Paul Roberts writes about banking, student finance and savings accounts and best savings rates.

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

Research in Ireland Has Found That Women Are Better at Saving Money Than Men

Research in Ireland has found that women tend to be better than men at saving money. Of course, such 'data' will likely fuel the old 'it's official, women are better than men at something else - add that to the list above driving, multi-tasking and smelling nice,' argument that has been muttered, countered, and accepted since the dawn of time.

Yet, it also shows something more positive, i.e. that a nation also looks to be battling its way out of recession quite successfully - and that more people may now be aware of the importance of savings.


The research (collected and available at postbank.ie) shows that more than half (58 percent) of men and women asked in their Quarterly Savings Index consider the female of the species to be the better savers. Women themselves are confident that they the most frugal gender, with 65 percent claiming that they were the best savers. Yet, the actual statistics pitch men and women closer together - with 80 percent of men and 82 percent of women saving regularly - whilst men are said to put more away, with a third of those asked stating that they saved €250 a month.

The data is a good sign. The number of people devoted to saving is the highest in years, and the primary reason for doing so is security. This is a fact that is evident when one acknowledges the average decline in interest rates across the country - similar to that which is being seen in the UK and the rest of Europe - but it has also been backed up by nearly half (49 percent) of the postbank respondents who admitted they were concerned about the safety of their money at a time when possible unemployment is a lingering reality.
However, the risk of unemployment is clearly not the only reason that many are eager to put some money away each month. Clearly the system is showing its worth aside from the benefits of interest available at times outside of recession. With a small proportion of our income being deposited into our saving accounts automatically, it is easier to forget it is happening, and less easy for us to spend it without thinking. There is a barrier that doesn't exist when you're stuffing cash into your mattress.

With the global economic crisis, the public are seemingly reassessing the importance of saving and how it can best be managed at a time when it is seen as both difficult and vital. However, alongside each individual's assessment of their own responsibility and that of the banks over their savings, such control no doubt has a knock on effect on how they treat their finances generally.

What's an Offshore Savings Account?

Offshore as a financial concept simply means placing money, wealth or assets in a country other than the one in which you live.

Typically it is the wealthy that place money offshore to take advantage of the favourable taxation regimes available in so called tax havens – but even for the likes of you and me there are advantages to the offshore savings world that we can all benefit from.

Offshore savings accounts allow people to either save a regular monthly amount or a lump sum, earn higher rates of interest from some offshore providers than we could if we saved ‘onshore’ with the local bank – and what’s more, we can earn our interest gross and only pay tax on it once annually which allows for extra compound growth in the interim which can give our savings a little extra boost.

1. Tax Free
   Most of us still have to pay tax on any income or gain that we derive even from investments or savings that are placed offshore. We are under an obligation to tell our local tax authority about any offshore savings accounts we have when we make our annual declaration to the IRS or HM Revenue and Customs. But because taxation is not deducted at source on the majority of offshore savings accounts we have up to a whole twelve months of compound interest giving our savings even greater growth power which makes saving offshore advantageous even when we ultimately do have to pay tax on the gains we derive from our savings.
   
   
2. High Interest
   The offshore savings accounts that offer the highest rates of interest are available to those in a position to regularly save large amounts monthly. Basically the more you can afford to save the higher the rate of interest you will be given, the higher the rate of interest the greater the compound growth you can earn and the harder your money will work for you.
   

A number of leading international banking providers offer offshore savings accounts that are easily accessible and secure. The award in 2009 for best offshore bank for expats was won by Anglo Irish Bank. You can open an account with them easily online and then have full access to your account and growth statistics online.

Gone are the days when saving and investing offshore was complicated, clandestine and the realm of the super rich or the super criminal – and we herald the arrival of an accessible concept of offshore from which we are all welcome to benefit.

How to Cope if you Lose Your Job - A Survival Guide to Redundancy

Tips and advice on how to deal with being made redundant

The dreaded ‘R’ word. It’s one you hope never to hear. But, worryingly, redundancies have been on the increase ever since the economy took a tumble.

The current economic climate has forced many companies to close and put many jobs under threat. Employers often resort to making staff redundant as a way of cutting costs. Implementation of new technology/systems or a workplace relocation can also deem a job redundant. 

Who can be made redundant?

• Any employee under contract of employment – written, verbal or a combination. Just turning up to work constitutes an agreement of employment.

Who is eligible for a redundancy payout?

To be eligible for a payment, you should meet all of the following criteria.

• You need to have been in continuous employment for at least two years.

• You are over the age of 20 at the time of dismissal.

• You have been dismissed by reason of redundancy.

What are your entitlements?

Unless a more generous settlement is written into your employment contract, you will receive only the statutory minimum redundancy pay. This is based on how long you’ve been employed, your age and your weekly pay.

Statutory Minimum Redundancy Pay

The amount is calculated as:

• Aged 41 or over - One and a half weeks’ pay for every full year

• Aged 22-41 - One week’s pay for every full year

• Aged 18-22 - half a week's gross pay for each year worked (as long as you worked in the same job beyond the age of 20).

If your employer doesn’t give you redundancy pay when you’re entitled to it, you should write to them asking for payment. If your employer still refuses to pay or cannot make the payment, you could make an appeal to an Employment Tribunal.

Note: The 2009 budget announced that the weekly rate of statutory redundancy pay will increase to £380.

Resource: The Advice Centre

Tips for dealing with redundancy 

Budget: Draw up a comprehensive plan of your out-goings. Where can you save money and how can you make best use of your cash? Speak to a financial advisor if necessary.

Claim your benefits: Depending on your savings and record of National Insurance contributions, you may be entitled to state benefits. Make an appointment with your local benefits office to find out more.

Invest: If you’re lucky enough to receive a substantial payout, think carefully about what to do with the money. You could pay off debts, or put it in a higher-interest savings account or ISA. Again, consider speaking to a financial advisor if necessary.

PPI: If you’re still employed and worried about the future of your job, you might consider getting payment protection insurance (PPI)? This could help pay a proportion of your monthly bills and offer support for a fixed period while you hunt for a new job. 

Source: How to Cope if you Lose your Job

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.

Savings: Tax-free savings boost to combat lower interest rates

Hard-pressed savers received a welcome boost in the Budget, with the Chancellor announcing that the amount of money they can pay into an Individual Savings Account each tax year will rise from the current £7,200 to £10,200. The popular cash element of ISAs will rise from £3,600 to £5,100. The new higher ISA thresholds will come into force this tax year for people over 50 and for everyone else from April 2010.

All money paid into an ISA is allowed to grow free of tax. The Treasury estimates there are 18 million ISA account holders and successive cuts in interest rates, as the Bank of England has slashed the cost of borrowing, have left them out of pocket. Pensioners, who rely on interest from their savings to cover living expenses, have especially felt the pinch as a result of the rate cuts. When the plight of savers became clear a few months ago, Treasury insiders promised a "Budget for savers" but in recent weeks such talk has been muted. Yesterday's move on ISAs was therefore greeted with some relief. Adrian Coles, director general of the Building Societies Association, said: "The recent interest rate cuts have meant savers have seen their income drastically reduce, so this will help give a greater incentive to save."

However, the tax break will do little to repair the damage already done to savers' finances from cuts in rates paid by banks and building societies. Raising the cash ISA limit will put an extra £30 a year back into the pocket of savers who have the maximum annual amount of money invested in an ISA, based on the current average rate of interest of just 2 per cent, according to financial information firm Defaqto. Last autumn, savers could routinely find cash ISAs paying more than 6 per cent interest.

Savers are also concerned by the cutbacks on pension tax relief for higher earners. "This could be the thin end of the wedge," said Peter Timberlake of insurer Friends Provident. "What is to stop the Government lowering this £150,000 limit to £100,000 or £50,000 in the future, gradually dragging people in? We have an ageing population and a pensions saving shortfall in this country. The Government should be encouraging saving for retirement, not making it less tax efficient."

Sourced from Independant [Link]

High Earners Given ISA Advice

High earners can avoid some the tax hikes announced in the latest budget by shifting more of their salary into a pension fund and increasing ISA contributions, according to experts.

The Institute for Fiscal Studies said the 50% tax rate may not deliver the full amount of revenue the Treasury had hoped unless the Government brings in more stringent measures to block avenues of tax avoidance.

Chancellor Alistair Darling has already cut pension contribution relief in a bid to stop those with high salaries placing more of their wage into a pension fund to pay less income tax.

But this still works out as a good option for the next two years, before the new 20% relief rate is brought into force.

Expanding on the revenue maximisation theme, senior tax partner at BDO Stoy Hayward Stephen Herring, said: "The first basis is to maximise pension contributions in the next two years, and maximise contributions to ISAs noting that the limit goes up to £10,200 in October for the over 50s and for everyone else in April next year.

"Then if you're of the mindset that you're willing to take a high level of investment risk, you can look at the Enterprise Investment Scheme and Venture Capital Trusts which provide tax relief."

Sourced from Confused.com [link]

Tesco's Bank Savings Balances Boost

As supermarket chain Tesco announced record annual results, it also revealed it has seen a near-doubling of savings balances at its retail banking arm since the downturn began.

Since last autumn's financial crisis began, Tesco has relaunched its banking operation, Tesco Personal Finance (TPF), as a safe haven for savers to deposit their cash.

TPF has gained success through low consumer confidence in established brands, particularly among its own loyal customers, as the saving balance rose from £2.5 billion in mid-October 2008 to more than £4.5 billion by the end of February.

The group appears to be turning TPF into a full-service retail bank as it has now bought out former partner Royal Bank of Scotland to take the 50% it did not own last December.

Tesco plans to open 30 bank branches in its stores by the end of this year, following a trial which has been running in Glasgow since 2006.

TPF now has six million customers since it launched 11 years ago and offers services including credit cards, pet insurance, bureaux de change and savings accounts.

Sourced from Confused.com [link]

Guide to Savings 2009

Need to save cash? Which account is right for you? With Bank of England interest rates at a record low, getting the best possible return on your savings has never been more important. In today’s market, it really pays to know your ISA from your fixed-rate bond.

Follow Confused.com’s guide to savings accounts to ensure your money is in the right place…

1. Instant access accounts

These accounts, also known as no-notice accounts, enable you to get your hands on your cash without restrictions.

The most recent figures from the Bank of England show the average interest rate paid on a branch-based instant access account has slumped to just 0.17%. But don’t despair - you can get up to 15 times this amount by shopping around for the best rate. Try Confused.com when comparing savings accounts.

GOOD FOR: People who want the security of knowing they can get hold of their money without having to wait. But, you’ll pay for the privilege, as these accounts typically offer the lowest returns.

2. Notice accounts

Under these accounts you generally have to provide notice of between 30 and 120 days to withdraw your money. As a result, these accounts may not be suitable for people who think they might need their cash in a hurry, but they do tend to offer higher rates than instant access accounts.

GOOD FOR: People who are confident they could wait for the required notice period.

3. Internet accounts

The overheads involved in running these accounts are lower than on branch-based ones. This is reflected in the interest rates they offer, which are usually higher than on instant-access accounts. Internet accounts often let you withdraw your money without giving notice.

GOOD FOR: Web savvy people who need instant access to their cash but want to get higher returns than on branch-based accounts.

4. Regular savings accounts

Banks and building societies have become increasingly reliant on using savers’ money to fund mortgage lending since the credit crunch struck, and this has led to many groups launching regular savings accounts.

Under the terms of the accounts, you agree to pay in a set amount of money every month for a year, although it’s sometimes possible to vary the sum. You can’t withdraw any of the money until the end of the year, when the interest is added to it and the total is usually transferred to a lower interest account.

GOOD FOR: People who have spare cash to set aside every month and for people who need a little help with the discipline of saving. Not so great for anyone with a lump sum to invest, as the money can only be paid in on a monthly basis.

5. ISAs

The benefits of ISAs shouldn’t be underestimated in the current low-interest rate environment. Not only do the accounts typically offer higher interest than instant access and notice accounts, but holders don’t have to pay any tax on the returns they receive.

As a result, a higher rate taxpayer needs to earn 1.67% on a normal savings account just to equal every 1% they earn through an ISA, while a basic-rate taxpayer would have to earn 1.25%.
You can pay up to £3,600 a year into an ISA, and with many of the best-buy deals offering instant access to your money, it’s hard to see a downside.

GOOD FOR: People who want to save long-term and can afford to lock in money for 12 months.

For more information on ISAs, see Confused.com’s guide to tax-free savings.

6. Fixed-rate bonds

These are the accounts that are paying the best return at the moment, with many fixed-rate bonds offering interest of more than 4%.

The reason for the high rates is depositors have to lock up their money for a set period of time, generally between one and five years. Interest is either paid annually or when the investment matures.

GOOD FOR: People whose main consideration is to get the best possible return on their cash.

7. Monthly interest accounts

These tend to be notice accounts upon which the interest is paid monthly rather than annually. The rates paid on the accounts are usually slightly lower than for notice accounts, to reflect the fact you get the interest sooner.

GOOD FOR: Retired people who are using their savings to boost their income. And those hoping to live off returns on their savings, such as during a career break or maternity leave.

Log on to Confused.com to compare savings account rates.

Sourced from Confused.com [Link]

Young People Turning Backs On Debt

Research has found that young people are turning their backs on spending and credit cards in favour of saving money.

A poll by Ci Research found that 70% of people aged between 16 and 26 are not comfortable with accumulating debts and would rather save up for things they want to buy. They added that they would only borrow money as a last resort.

However, figures show that there are young people who are less reluctant to take on debt, with 4% of the 500 people questioned saying they did feel very comfortable with debt.

The survey found that the economic downturn is having a significant impact on young people's saving habits. A quarter of people said they were now saving more than they had been and 19% plan to set aside more cash.

A further 62% said they did not have a credit card and 75% said they were keeping a close eye on their finances. Just 12% of those questioned said they were saving less or had stopped saving altogether.

Colin Auton, of Ci Research, said: "The report reveals undeniable proof that recent economic changes have influenced young people's behaviour and opinions on both spending and saving."

Sourced from Confused.com [link]

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]

ISAs: A Guide to Tax-Free Savings

Making the most of your annual ISA allowance. As interest rates dive to record lows, there’s never been a more important time to get the best possible return on your money. Key to doing this is ensuring you don’t hand over more cash to the taxman than you have to.

But does that mean investing in an offshore tax haven or working out a tax avoidance scheme? Not at all. Tax-free savings simply means making the most of your annual ISA allowance. Read this guide for more information...

What is an ISA?

ISAs, or Individual Savings Accounts, were introduced in April 1999 to enable people to save a certain amount of money each year without having to pay tax on the gains they make, or the interest they earn.

In other words, ISAs are an incentive for you to save.

Savings levels

Consumers can currently save up to £7,200 each tax year into an ISA. They can either invest the full amount into stocks and shares, or they can save up to £3,600 in cash, with the remaining balance invested in shares.

No tax is paid on the interest earned through cash ISA savings, while any money built up in an equity or shares ISA is free of capital gains tax, although a 10% tax is still automatically charged on any income from share dividends.

Is it still worth it?

Historical data from the Bank of England shows that the average returns paid on ISAs are typically higher than on other savings accounts, and this is before the tax advantage.

But more importantly, paying tax on savings actually eats into the returns you’re getting. For example, a higher rate taxpayer needs to earn 1.67% on their savings just to equal every 1% they earn through an ISA, while a basic rate taxpayer would have to earn 1.25%.

As a result, a higher rate taxpayer would have to find a rate of 5.01% on a normal savings account to equal an ISA rate of 3%. In the current climate, returns of 5% are hard to find, showing the benefits of using an ISA.

Although the tax-free returns benefit may not seem huge when you’ve saved only one year’s worth of the allowance, it will be fairly significant by the time you’ve tucked away £3,600 a year, plus interest, for 10 years!

Where to get an ISA

As with other savings accounts, shopping around for the best rate is key. You can find a selection of cash ISAs and shares ISAs on the Confused.com ISA page.

You can only pay into one cash and one shares ISA each tax year, so it pays to pick a good one.

If you already have an ISA but are worried that it’s no longer offering the best returns, you can move your savings into a new account. But it’s important you get your existing provider to transfer the funds for you. This will ensure you don’t lose the ISA status on the money you’ve already saved.

It’s also possible for people to transfer the money they’ve saved in a cash ISA into a shares one, although money in a shares ISA can’t be transferred to a cash one.

Sourced from Confused.com [Link]