Interest rates on savings accounts and ISAs are disappointingly low at the moment, and this is leading more people to look at alternatives. If you want to get more from your money than your bank is offering, there are a few different things you could try.
One of the more popular options at the moment is investment. This is for those who are willing (and can afford) to take some risk in the pursuit of getting more from their money. Options such as property investment, stocks and shares or peer-to-peer lending can potentially bring in much more than a savings account. Stocks and shares can also be placed into an ISA so any earnings are tax-free, and next year the same will apply to peer-to-peer lending. However, your capital is at risk and there is also the possibility of losing money. Make sure you understand the risks before entering into any investment.
Those who are not so happy with risk and want to get a bit of fun out of their investment could consider buying premium bonds. There is no risk per se, as you can withdraw the same amount of money as you put in at any time. However, premium bonds are a gamble in one sense, because your money will not earn any interest. Instead, you will be in with a chance of winning monthly prizes. You may earn nothing and just have your original funds, or you may earn much more than you would from a savings account. In fact, many bond holders win even less than the interest rate. However, while interest rates do not look like much to miss out on, more and more savers are deciding it is worth a try.
Extra Mortgage Payments
This is a tactic designed for long-term gain at the expense of short-term loss. Initially, you will be worse off in the sense that you will no longer have your money. However, the interest rate on your mortgage is likely to be significantly higher than that on your savings account. By paying extra on your mortgage, you are reducing the amount of interest that your debt will accrue. This will save you far more than you would have earned in savings interest, and ultimately you will be better off.
High Interest Current Accounts
Some banks offer current accounts with higher interest rates than savings products, albeit for limited times and a limited amount of money. In some cases, interest rates after tax remain higher than the average ISA. While the improvement over a savings account is not huge, it is still an improvement. Unlike many alternatives, it also allows you to keep hold of your money and have it readily accessible. This makes a high-interest current an option that is definitely worth considering for at least part of your savings.