Weekly Savings Gossip

• No news is bad news in the savings market of late
• Little change this week but the overall trend continues - good accounts get pulled and/or gently trim their interest rates
• If you're interested in 1 and 2 year fixed rate savings bonds then remember the current rule of thumb - don't dilly-dally because the best deals normally aren't listed for more than 2 weeks, if that
• On the Cash ISA front the Alliance & Leicester deal paying 3.5% continues to be a fabulous offer with a very strong guarantee

Special Note re Inflation

• With inflation now running at 3.50% lower rate tax-payers need a yield of 4.38% to break even, higher rate need 5.83% (those yields are gross)
• Clearly that's impossible without taking on more risk
• One option to try and make up the difference is to invest time and effort in your budget, ie see if there are any savings you can make in everyday living expenses, the main one being food which has shot up in value over the several months
• Consider using the Top Offers page at MySupermarket to base some of your purchases around - it can save good money
• I don't use the site to order online, just to see what's available and looks good value before I shop

I wouldn't lock my money up for more than 2 years

• It's possible to earn a higher interest rate for 3+ year fixed rate bonds
• But with interest rates at 0.5% the next move is surely going to be higher
• Therefore a more prudent savings strategy is to keep cash locked up for a maximum of 2 years, ie you offer your savings more flexibility
• This page is updated every Monday

Savers who deposit money in Post Office accounts have been informed the cash is now NOT covered by the UK's Financial Services Compensation Scheme (FSCS).

Instead the Post Office's savings are bizarrely covered by the Irish Deposit Guarantee Scheme (IDGS).

But whereas the UK scheme guarantees savings up to £50,000 the Irish guarantee up to Euro 100,000.

However, some UK based savers are moving money from the Post Office to UK banks and Building Societies who are covered by the FSCS. Their argument is simple - they are not comfortable with their money being insured by a different country's financial laws.

Post Office savers take note.