Martin's 2020 warning to SAVERS

'Millions earn insulting interest and it's set to worsen. Check if you earn under 1.35%. If so, DITCH NOW - you can get up to 2.75%'
 

Martin: It's looking like another dire year for savers. Six months ago rates were poor, and since then they've plummeted, and there's no respite in sight.  

In July, the top 1yr-fix savings rate paid more than 2% - now it's just 1.65%. And just this week, the table-topping easy-access deal was withdrawn, meaning the new best pays less.

These depressed rates are caused by a mix of a gloomy world economic outlook, weakening competition, and, for some big banks, because a recent rule change has stopped them using surplus cash to fund their investment banking arms - leaving them with a glut of cash, so they needn't entice savers in.

To get a half-decent return you need to become an active, disloyal, aggressive saver, shifting from best rate to best rate. Yet millions, whether through ignorance, fear or inertia have money sitting in pitiful accounts earning as little as 0.1%. So now the New Year's turned, CHECK WHAT YOUR SAVINGS PAY. Owt earning less than the top 1.35% easy-access rate needs moving. Don't dally - every day is lost interest.

Below the team and I have highlighted the best deals, in order of simplicity, then a progression of options.

• The bare minimum: earn 1.35% easy access. Here you can put money in and withdraw it whenever you want. For most people these are tax-free if you're within your personal savings allowance. So if you are earning less, why?
  
   - Top 1.35%, unlimited access (min £1 deposit). Marcus* (owned by Goldman Sachs) and Ford Money* (yes, the carmaker's bank) pay 1.35% AER variable and you can withdraw as often as you like.

   - Earn 1.4% with restrictions. Yorkshire BS pays 1.4% AER variable (min £100) but only lets you take money out on one day, of your choice, each year (based on the anniversary of account opening); after that you need to close it to withdraw.
  
  - Earn 1.65% if you can wait for your cash. Our top-pick 'notice account' is from app-based Moneybox*. It pays 1.65% AER variable (min £1), but to withdraw you'll need to give 95 days' notice. Cash you deposit with Moneybox is held by Investec and shares its savings protection.
  
  As these are all 'variable' rates, they can change, but the provider has to notify you in advance. If they drop, ditch and switch. For lots more deals see top easy-access savings, and top notice accounts. 

• Got debts or a mortgage? Overpaying often beats saving. If you can, it always pays to clear expensive debt instead of saving. After all £1,000 in top savings earns £10-£20/yr, while £1,000 debt on an 18% credit card costs £180/yr. Clear the debt with the savings and you're £160+ better off. See Repay Debts or Save?
  
  The logic is similar but a bit more complex with mortgages - see Overpay my mortgage with my savings? And it's even more complex with student loans. See Martin's 'Should I clear my Plan 1 student loan?' video (for all those who started uni in 1998 to 2011 plus Scot/NI students in 2012 or later) and 'Should I clear my Plan 2 loan?' guide (for Eng/Welsh students who started in 2012 or later).

• Top savings fixes: up to 1.85% for two years.  If you're willing to lock your cash away without access, you can earn more in a fix (also known as a savings bond). And unlike easy-access accounts which have variable rates, here they're certain. Full options in top fixes, but in brief...
  
  - Top 1yr fixes. Ford Money* (min £500) and Zenith Bank UK (min £1,000) pay 1.65% AER. 
  
  - Top 2yr fix. Union Bank of India UK* pays 1.85% AER (min £5,000) or Ford Money* pays 1.8% AER (min £500).

• Santander 123's 'earn 1.5% on up to £20,000' current account is 'back'.  Even though it's a current account, Santander 123*  used to be our top pick for savings. Then it dropped its rate, and normal easy-access rates improved, so we moved away from it.  Now those rates have dropped, we've brought it back into our best buys. 
  
  It pays 1.5% AER variable interest on savings up to £20,000 (nowt above that) but charges a £5/mth fee. However, as you get 1-3% cashback on bills paid from it, as long as your cashback is bigger than the £5/mth (which it is for mid to large bills), it's a winner. Plus, it has a linked regular saver at 2.5% AER fixed for 1yr on a max £200/mth (see below for more on regular savers).
  
  You can earn even higher interest on much smaller amounts with a couple of other banks. Nationwide FlexDirect* pays 5% AER fixed in year one on up to £2,500 (1% AER variable after).  TSB Classic Plus* pays 3% AER variable on up to £1,500. Yet if you're going to switch bank, many can earn more just going for the  'free cash to switch' incentives. Full eligibility info, incl info on min monthly pay-ins, in high-interest current accounts.

• Earn over 2.5% on up to £800 saved a month. As the name suggests, regular savers are for putting money aside each month, not lump sums. They pay higher interest, but generally only on smaller sums for a short time. Combine a couple, though, and you could save up to £800 a month.
  
  - Top open-to-all regular saver. Coventry BS pays 2.5% AER variable for 12mths and lets you save up to £500/mth. You can miss monthly payments without penalty. Withdraw cash before the 12mths are up and you lose 30 days' interest on the withdrawal.
  
  - Bank with First Direct or HSBC? Earn 2.75% (newbies get up to £175 free too). Both banks have linked regular savers paying 2.75% fixed for a year. With First Direct you must deposit £25-£300 each month, HSBC £25-£250. As these accounts also pay free cash to switchers, it can be lucrative. See Best Bank Accounts.

• Top cash ISAs pay 1.31% - best if you pay tax on savings.  A cash ISA is just a tax-free savings account in which you can put up to £20,000 a year. Yet since April 2016, more than 95% of people don't pay tax on savings as the personal savings allowance lets you earn up to £1,000 in tax-free savings interest a year (£500/yr for 40% rate taxpayers, £0 for 45% payers).
  
  As cash ISAs usually pay lower rates than normal savings, most people are better off just going for the top-paying normal savings. Currently the rates are a little closer, so for those who pay tax, or are close to earning enough interest for that to happen, cash ISAs can be worth a look.  
  
  At the moment the top unlimited-withdrawal easy-access cash ISA is Sainsbury's Bank (min £500) at 1.31% AER variable. Yorkshire BS  pays 1.35% AER variable (min £100) but only lets you take money out on one day of your choice each year (based on the anniversary of account opening), though you can close the account or transfer out at any time. If you'll just get the ISA to leave cash in there, this may not be a problem.
  
  You can also get fixed-rate cash ISAs, but their rates lag far behind their non-ISA counterparts, so steer clear unless you'll definitely pay tax on savings interest. See Top Cash ISAs.

• Are Premium Bonds, at 1.4%, worth it? While the 'prize fund' is an average 1.4%, for each £1m winner, many must win a lot less than the average. For someone with typical luck, the top normal savings accounts still beat Premium Bonds. Yet for those with larger sums to put in, or who pay tax on normal savings interest, Premium Bonds can be a decent option. See Are Premium Bonds worth it?

• Low income? Get a 50% savings boost via Help to Save. For those who qualify, Help to Save is unbeatable - it can add 50% on top of savings of up to £50 a month.

• Saving for a first home? Get £1,000s added by the state. If you're aged 18 to 39, you can open a top Lifetime ISA, which gives you a 25% boost on up to £4,000 saved a year (so a max £1,000/yr boost). 

• Earn potentially higher rates in sharia accounts. These operate according to Islamic banking principles and often beat traditional savings. They pay 'expected profit' rather than interest, meaning returns aren't certain. But we're not aware of any UK-based sharia banks that have failed to pay their expected rates in the past. They're open to anyone, of any faith, and you get the same £85,000 per person, per institution savings safety protection.
  
  - Top sharia notice account. BLME pays an expected 1.71% (min £10,000) on its 90-day notice account.
  - Top sharia fixes (min £1,000). BLME's 1yr 'fix' pays an expected 1.8%; its  2yr 'fix' pays an expected 1.95%.

• Peer-to-peer advertises up to 6.5%, but it ISN'T saving. Lending firms such as Ratesetter, Funding Circle and Zopa advertise eye-catching returns of up to 6.5%. Yet you could lose your money as there's no protection. Make sure you understand peer-to-peer risks.

• Should you invest instead? With savings your cash is protected; with investing you hope that it grows quicker, but at the risk of losing some or all of your money. Investing isn't wrong - it's just not something we cover. See Is investing right for me?

Over to Martin: "Overdraft rules are changing. Bank charges for busting overdrafts are going (though you can still reclaim old ones), but interest rates are rocketing - 40% is the new normal. These rates are double those charged on credit card debt, so I'll be showing you how to beat that. Plus with the sales now on, when do you have a right to return goods? Do watch, or set your VideoPlus recorder."