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Two Per Cent Interest? It's Time to Ditch High Street Savings Accounts

Alastair Walker 05/07/2012 09:46:00

Two Per Cent Interest? It

UK savers are deserting the High Street banks and building societies, as rates continue to stay well below the real rate of inflation. Latest statistics suggest that on average British people are saving just £87 per month  - but is it worth saving anything with interest rates so low?

Watch My Wallet had a look at some of the typical rates that a saver with say £5,000 could get on the High Street.

Manchester Building Society could only manage 2.3 per cent on an ISA, with 35 days notice required before withdrawal.

HSBC can offer just £567 worth of interest on savings of £15,000 into an ISA account over three years. This works out at just over 2 per cent.

The Coventry Building Society offer 3.25 per cent interest on their telephone saver account, but 1.25 per cent of that is a first year bonus. So you are back to just over 2 per cent after that.

Coins And Notes UK CurrencyREAL INFLATION IS RUNNING AT OVER 7 PER CENT

As anyone who buys food, needs petrol or pays rent will know, real inflation is running way above the official government price index figure of 4.3 per cent.

A study by NFU Mutual found that in the countryside inflation has been over 7 per cent over the last 12 months, as food, heating and transport costs are all higher than in towns and cities - mainly due to the lack of competition.

DON'T LET CASH JUST SIT THERE LOSING VALUE - MAKE YOUR MONEY WORK

Once you set aside some `rainy day' money for emergencies, the best way to get a decent return is to invest your money. Here are some options;

Demand for metals continues to be strong - invest in rare earth mining companies, or major metals recycling businesses.

The vintage clothing market is booming - rent a unit and buy clothes in bulk at car boot sales and charity shops. Wash and iron them, then sell online.

Look at `Crowdfunding' opportunities - basically become your own business `Dragon,' lending money to entrepreneurs. Obviously you need to spend time and money checking on companies and people before you invest.

8fun Ladies Shopper BikeBicycle sales continue to rise as people struggle to cut commuting costs. Research a local market carefully and invest in selling a quality, niche brand, leave the kids bike discounting to Halfords. If you find a good cycle repair person - hire them, they are worth their weight in gold.

Have you found a way to make decent interest on your savings? Post a comment below.

 

 

 

Alastair Walker is features editor of Watchmywallet.co.uk

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