How to boost savings returns

Esther Shaw / 09 February 2016

Five things you can do to make your savings work harder and get better returns.



Savers have been given yet more bad news with recent indications that interest rates are going to remain stubbornly low.

In fact, there are now expectations that the base rate will stay at 0.5% until at least the middle of 216 – and possibly even until the start of 2017.

While this is good news for borrowers, the outlook is very gloomy for those with money squirreled away.

How safe are your savings?

Savers hit by Funding for Lending

For the past few years, beleaguered savers have not only had to put up with low interest rates, but have also been hit hard by the Funding for Lending scheme.

Introduced in 2012 by the Bank of England, this scheme effectively subsidises bank lending, giving banks little need to attract deposits from savers – all of which drives down savings rates.

At the start of December, the Chancellor and Governor of the Bank of England announced that Funding for Lending is to be extended by two years, prompting concerns that savers’ misery could be dragged out further still.

With savers set for a prolonged spell of dismally low rates, the key is to look at the steps you can take to increase returns.

Five financial products you can afford to ditch.

1. Shop around for the best rates available

A simple way to boost returns is by shopping around for the very best rates you can find on all of your savings accounts. Useful sites for comparing rates include Moneyfacts.co.uk and Savingschampion.co.uk.

Also note that challenger banks are vastly improving the savings environment, and are currently offering many of the deals at the top of the “best buy” tables – so don’t limit your search to the high-street providers.

Seven signs that you need to get on top of your finances.

2. Lock money away

For some savers, it is worth thinking about locking money away into a fixed-rate savings bond or fixed-rate ISA, as these can pay higher rates than instant-access accounts.

But you must remember that you won’t be able to get immediate access to your money, so should only do this if you’re happy about tying up your money for a period.

3. Consider a high-paying current account

Another good way to increase the returns on your hard-earned cash is by moving your money into a high-paying current account.

How to switch bank accounts.

4. Become a peer-to-peer lender

A further option for those fed up with earning next to nothing on their money is to cut out the banks altogether and lend through a peer-to-peer firm instead.

The rates paid can easily beat those paid by high-street banks and building societies.

On the downside, these firms are not covered under the Financial Services Compensation Scheme (FSCS).

This protects deposits of up to £75,000 if your bank or building society goes bust.

The good news is, most sites carry out rigorous checks and operate safety net – such as “provision funds” – to help protect lenders.

Find out more about peer-to-peer lending.

5. Pay down debts

While you may want to focus on building your savings, it is also worth taking advantage of the low-interest environment to pay down money you have borrowed.

If you’ve got cash squirrelled away in accounts not earning very much, now is the time to pay off expensive debts, such as store cards, credit cards and overdrafts. 

For more tips and useful information, browse our money articles.

The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.