Martin Lewis urges those with at least £8,000 in savings to check their bank accounts NOW
- The financial guru said rates for savings accounts and Cash ISAs have boosted
- On his weekly podcast, he urged his listeners start searching for the best deals
- He said that finding the best rates could result in hundreds of pounds of interest
Martin Lewis has issued a warning to anyone with at least £8,000 or more in savings to check their bank accounts, amid the interest rate hikes.
The Money Saving Expert, 50, said that the rates for savings accounts and Cash ISAs have ben boosted following the Bank of England interest rate hikes.
He explained that searching for the best rates could result in hundreds of pounds of interest rolling into people’s savings accounts.
The financial guru advised checking that the account you’re using for savings has the best interest available – to ensure you’re making the most out of your cash.
Martin Lewis has urged anyone with £8000 or more in savings to check their bank accounts, amid interest rate hikes.
Speaking on his weekly podcast The Martin Lewis Podcast on BBC Sounds, Martin said: ‘It’s time for millions to reopen cash ISAs.’
He also warned that anyone who has a savings account more than six months old to ‘ditch it’ as it will have a ‘terrible rate’.
The expert said that people will earn more interest in an ISA than in a normal savings account, due to tax.
He explained: ‘The top pay 5.7%, and with rates rising, anyone with £8,000 in savings, check now if your money’s in a cash ISA.
‘Cash ISAs usually pay slightly less than the equivalent normal savings. So it’s only for those people who would pay tax.’
He explained that the threshold would be over £8,000 for a lower rate taxpayer and £16,000 for a higher rate taxpayer.
The Money Saving Expert said that the rates for savings accounts and Cash ISAs have boosted and searching for the best rates could result in hundreds of pounds worth of interest
Martin then walked his listeners through some of the top options currently available, he said: ‘On easy access savings, Chip pays 4.51%. The top Cash ISA Leeds Building Society and Principality pays 4.2% so normal savings are beating cash ISAs.
‘If you are paying tax though, that Chip pays 4.5% but if you were paying 20% tax on chip, then after 20% tax your equivalent rate is 3.16%.
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‘If you were paying 40% tax, your equivalent rate is 2.7%, way lower than you would get in a cash ISA.’
He then urged listeners to check what options are best for them as soon as possible.
The finance expert continued: ‘Vanquis Bank pays 6.15% as the top one-year fix in normal savings. Natwest is paying 5.7% in its top cash ISA one year fix.
He advised people who are locked into a cash ISA, to pay the penalty to leave.
Martin explained: ‘As a general rule of thumb, if you got a Cash ISA more than 6 months ago, you’re probably better to get out of it.
‘If you locked in more than 6 months ago your rates would have been terrible.
‘You will have to pay a penalty to get out but generally you will earn more in the new ISA than the interest penalty will cost you because an interest penalty where the interest isn’t very high isn’t that much.’
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