Where can I put my cash?

With savings rates at a record low, Paul Lewis weighs up your options

Mother and toddler girl getting money out of a piggy bank

Interest rates paid by National Savings & Investments will plummet from best buys to the very worst buys on 24 November. So what to do now with savings that were with NS&I?

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The best-paying easy access accounts are all with building societies. The top rate as we go to press is 0.96% from Coventry but it only allows two withdrawals a year.
Next best is the West Brom, paying 0.9% if you have at least £1,000, but beware: that includes a bonus that ends in just over a year. Diary it now! Also note that these rates are all variable and can change!

You should not put more than £85,000 in any one financial institution – that is the compensation limit if the provider goes bust, and all the accounts mentioned  here are covered by that. Of course, I do not expect any bank or building society to go bust, but then I always wear a seat belt even though I don’t expect to crash my car!

If you’re happy to take this risk, the West Brom allows up to £500,000 in the account. You can earn a smidge more in a notice account – where you have to give 90 or 120 days’ notice to take your money out. Several providers offer fractionally above 1%.

If you can tie up your money for longer, or believe rates will be falling further, then fixed-term accounts pay a little more, but you cannot take your money out until the end. The top one-year account is with DF Capital at 1.18%. Over three years and five years respectively it is UBL at 1.4% and 1.5%. Better rates are available from Shariacompliant accounts. They pay profit, not interest, so they are not guaranteed, but they have always paid.

Cash ISAs are offering pretty much the same or slightly lower rates. But remember: unless you have used up your tax-free savings allowance – £1,000 interest for
those paying basic rate tax or £500 for those on higher rate – there is no point in an ISA. You need over £100,000 in a good account to use up the basic rate savings allowance.

Never leave your money in a high street bank. You can always do better. Check the best rates at savingschampion.co.uk.

Paul Lewis presents Money Box on Radio 4

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