Your Bank Account and How to Save Money

Surprising though it may seem, it is possible to save money where your bank account is concerned.

This is an increasingly important subject in both the UK and USA with the recent upheavals in the sector. So keeping an eye on your money and making it s-t-r-e-t-c-h is becoming more important than ever.

No matter if you are out in the wide, wide world earning your crust, or still at University or College don’t struggle with your finances, we are here to help.

Whether you are saving money for a new car, saving money for a house or retirement, the only solution is to economise and save money wherever and whenever possible.

On this site we are endeavouring cover many of the subjects allied to banking and money such as the dreaded word – debt. We will also take a look at student money problems, the security of online buying, etc.

Many people find their eyes glazing over at what they call this boring subject. On the contrary, this is where you can save yourself a mint of money. The following tips will help you in your quest.

Don’t leave your money in the same account for years.

By changing the home for your money it is possible to at least double the interest you receive on your accounts. This could amount to hundreds of pounds over the years. In many cases, if you are a prudent saver, this could be thousands of pounds.

Start concentrating your thoughts on how this can be done.

It will pay you to hold your money in more than one account (if you are fortunate enough to have more then £30,000 savings). This figure of £30,000, which allows for an increase in this figure because of the interest it will attract, is near to the amount that by law, is paid to you in compensation if the bank collapses. It was recently announced by the Chancellor of the Exchequer that this figure of £30,000 would be increased to £100,000, but then a few days later this promise was quietly withdrawn.

This is how the law stands at the moment. So play safe, and have your cut-off figure set at £30,000 and keep your peace of mind.

Many people, particularly the older generation, speak in awe of
these banking organisations and building societies.

To be realistic they are only money shops charging us
for their ‘service’.

Don’t make their task easier by accepting their low rates of interest.

Shop around.

These organisations will make more than enough money in profits every year, so make sure some of it comes to you via the interest rates.

With the Bank Rate changing more frequently these past few months, this point is well worth your consideration.

The sad fact is that people often get divorced more times than they move their account. Learn to be a ‘rate tart’ and invest where you receive the best rate of interest. A Bank Manager recently told the author that banks loathe ‘rate tarts’, which proves that by becoming one you are getting things right.

Swap around when these rates change.
Move your account.

This is no longer a tiresome task as your new banker will be only too pleased to arrange the transfer of your Direct Debits and Standing Orders as they will be keen to secure your business.

Keep in mind – you have the money – they want your money –
you want the best interest rate.
Go for it.
This is a way of making your money work for you.

At the time of writing Alliance and Leicester is paying 8.5% on credit balances in its Premier Direct account while charging no interest at all on its overdraft. However, it pays to look behind the headline announcement. This is an introductory offer and lasts for one year only, and after this initial period the attractive 8.5% disappears and customers will be paid 1% less than the base rate.

First Direct is an offshoot of HSBC. Therefore, although it runs a telephone/on-line operation you also have the convenience of paying in your cash, cheques over the counter at any HSBC branch. But, the catch is, First Direct do not offer such competitive rates as the telephone/on-line operations only. Only you can decide your priorities.

One solution here is to use the convenience of First Direct to pay in your small amounts of cash. When the sum starts to accumulate, transfer the necessary balance to one of the high interest paying on-line operations. The best of both worlds. Good service and high interest will enable you to save money again.

However, a very serious word of caution here. In February, 2007 HSBC (First Direct) introduced a new regulation stating that if you only hold one product with First Direct i.e., a cheque account then you will have to pay at least £1,500 into this account each month, or maintain an average balance on it throughout the month in excess of £1,500, or take out another product with First Direct. If you choose not to this you will be charged a banking fee of £10 a month for the account. Also there is no interest on this account. No wonder HSBC have been offering a £100 bonus if you sign up to this account.

So think carefully before you act here. Definitely a case of doing your homework and shopping around.

Intelligent Finance. offers a higher than usual rate of interest on their current (cheque) account.

An Intelligent Finance account can be combined with a First Direct Account or other similar accounts. To transfer your money around just use the (free) convenience of BACS transfers. This will be explained to you by the bank if you are unsure.

People speak of Current accounts as being ‘free’, but one look at the pitiful rates of interest that are paid by HSBC, Barclays etc. on these Current accounts, soon establishes this to be untrue. Some, such as First Direct are now paying no interest at all on current accounts.

Recently, Mr. John Fingleton, Head of the Office of Fair Trading, stated the idea that customers benefited from free banking was a myth and that they were paying for the services through hidden charges.

The OFT is preparing to mount a legal challenge to make charges imposed by the banks for services, including overdrafts and other procedures, illegal.

Periodically there are ‘special offers’ that are designed to attract new customers. At the time of writing Alliance and Leicester are offering accounts to the over 50’s. Exercise caution here because things are definitely not so beneficial as they would appear to be at first sight.

Most of these special offers are time limited.

The new kid on the block is Icesave. This completely on-line operation has, at time of writing, just increased the interest on their savings account to 6.3%. This interest rate makes your aim to save money even easier. Icesave are currently offering 6.7% interest on their Easy Access Savings Account.

A very interesting point can be made here.

Recently, Icesave immediately raised their interest rate to 6.20% on the very day the Bank of England Monetary Policy Committee raised the interest rate to 5.75%. This is a very fair offer and one not to be ignored if you value your money and savings. This has since been raised to 6.3%

Another new venture into this lucrative market is Sainsbury (yes – the grocer). Sainsbury are offering 6.5% interest p.a. on all new accounts.

Check though that you have a good credit record when applying for loans – even missing things like a mobile phone payment for a couple of pounds can have a detrimental effect. Almost half of the applications received are now being rejected. Six months ago, only a third of applicants were being rejected. The credit squeeze is definitely taking effect and loans are now even harder to secure.

Just keep thinking – save money. Bank Accounts are an ideal place to put this into practice. Remember to limit your account savings to £30,000 until the legislation is improved.

These are just a few illustrations of the offers that are available. Shop around and remember to read the small print. Things are often not all that they appear to be at first glance.

Don’t get caught!

One glaringly obvious tip regarding saving money is to make sure your account remains in credit. Beware of exceeding your overdraft as the interest levied is painfully high. Now – try to remember what the grim looking teacher is saying to you:

Save money. A short time spent doing your homework will increase the amount of your money at your disposal. Even if you are still a student it’s never too early to start taking care of it! As a rule, telephone and online operations give a higher and better rate of interest than the big five organisations. Their overheads are less therefore they are able to be more competitive.

This is likely to increase in the not too distant future if some penalties that the big five can impose are removed by law, and instead they start charging up to £300 for operating your accounts in order to maintain their already enormous profits. Just watch this situation carefully.

You have probably worked very hard for the money you earn, so don’t lose it when it comes to choosing a bank.
Keep a very careful watch on your money – only you can do this.

“That money talks, I’ll not deny.
I heard it once, it said Goodbye”.