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Money mistakes you shouldn't make in 2013
Money is stretched tight for most households which is why you should take the time to make the most of the savings you do have next year.
by Michelle McGagh on Dec 30, 2012 at 07:01
Savings rates are perpetually low so it’s even more important that you make the most of your cash in 2013, and don’t repeat the same old money mistakes that many of us have made this year.
Being better with money, saving more and spending less usually creeps on to the New Year’s resolutions list and by following these rules from rate checking service savingschampion.co.uk you can ensure that you stay one step ahead of the banks and make your money work for you in 2013.
Anna Bowes, director of savingschampion.co.uk, which has an online rate tracker that helps you see if your accounts are the best on offer, said making one mistake may not make a big difference, but making all of them could have a huge impact on your finances.
‘These savings mistakes may seem inconsequential but if you add them all up, you could be wasting a packet. It’s easy to carry on doing things the way you’ve always done it – but why not try something new.’
Savings rates have fallen consistently over the past year so chances are that your money is sitting in an uncompetitive account having its value eroded by inflation. Unless you are reviewing and switching your savings accounts regularly, you are throwing away money.
Savingschampion.co.uk estimated that someone with £50,000 in savings would miss out on £1,125 a year in interest by failing to switch to the best paying easy access account from the worst account.
Unfortunately there are no easy access accounts that beat inflation on offer. The Post Office is offering the highest rate at 2.35% on its Online Saver (Issue 8).
Use your allowances
Even if you don’t fancy investing your money in a stocks and shares ISA, you can still save £5,760 in a cash ISA in 2013. Unlike savings accounts, you don’t pay tax on any interest accrued in either a cash or stocks and shares ISA so you should make sure your ISA is maxed out before you invest your money in another savings wrapper.
Coventry Building Society is offering the best deals on cash ISAs at the moment. You can earn 3.1% on its 60 Day Notice ISA, but as the name suggests you have to give 60 days’ notice if you want to access your money.
Keep track of maturity dates
If you have money in a fixed term bond that matures next year, make sure you know when the maturity rate is and make plans for the money. If you don’t plan to move your money it will automatically get rolled over into a new issue of the bond which will more than likely be paying a lower rate than you’re getting now. And if you try and take the money out after it’s been placed in a new bond you’ll pay a high penalty.
If you’re willing to lock your money away for five years you can make 3.5% on the Union Bank Fixed Term Deposit account. The same bank offers 3.25% on money locked away for three years into a fixed term bond.
Keep track of bonus periods
Many ISAs and savings accounts offer a higher bonus rate for a certain period of time but make sure you know when the bonus ends because after this you’re more than likely to see your rate drop. Introductory bonuses are pretty standard these days so make sure you know when it’s up and move your money to a higher paying account.
Don’t be loyal
Consumers are surprisingly loyal to banks and building societies but these organisations never reciprocate this loyalty. The best rates for savings, the best current accounts and preferential deals are always offered to new customers so make sure you change your current account to get the best deal – which may include cash incentives to move.
For example, Santander is offering interest rates up to 3% on its 123 Current Account for balances between £3,000 and £20,000, although there is a monthly fee for the account that needs to be taken into consideration.
More about this:
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- Savers should max out on cash ISAs instead of fixed-rate bonds
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- How to get your savings to beat inflation
- Savings rates: where to put your cash
- How to pick a good fund for your ISA and pension
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