- Find the right savings account
- Cash ISAs
- Instant Access Savings

The good times are over for those used to earning six per cent or more on their savings deposits. With the Bank of England base rate sat at its historic low of 1 per cent banks and building societies are paying peanuts on the average savings account. The situation is made worse by the fact that inflation is still above average meaning that any gains you make on your money are effectively being wiped out by a higher cost of living. So, is it worth saving?

Returns may turn a corner

Inflation peaked last September when it hit rates as high as five per cent, meaning that the cost of goods went up sharply. Five per cent proved a peak however and the cost of living has come down sharply since then and shows no sign of stopping at the three per cent we’re currently seeing.

It could well be that we’ll see rates fall to one per cent or less before the year is out. In this respect savers will no doubt benefit but when it comes to the rates banks and building societies are likely to pay, no body is predicting this to increase for the foreseeable future.

What to do?

For those of us with debts, now is the time to pay them off. It will be a struggle to grow your money by saving but by paying off debts your can ensure that your debts don’t grow. So, if you have a credit card pay chunks off your balance, if you have a mortgage start making over payments and if you have an overdraft reduce it.

Creative thinking

If you are lucky enough to be debt free then now could be the time to look at alternatives to banks and building societies. Premium Bonds, the government run lottery, has said that they will continue to pay 1.8 per cent interest for the coming months. This obviously isn’t much but it’s now better than many savings accounts and there’s always the chance that you could scoop the one million pound jackpot.

A traditional route

If you are going to opt for a traditional savings account then be sure to search the market for those paying above the average. It’s also worth remembering that by locking your money into a fix rate bond you can guarantee a better return, sometimes as much as four or five per cent, even in today’s market. The only downside is that you won’t get access to your cash for a year at least.

Whatever route you decide to take make time to research your options and be informed about the sorts of products that are available to you.