How to Grow Your Savings in these Tough Economic Times


Although there are some signs indicating that Britain is coming out of the recent double-dip recession, many are still feeling the full effects. The increased cost of living has forced many to make cutbacks on their spending or take on some extra hours in order to compensate.

There is however a select few who have managed to save some money, however with savings rates struggling to beat inflation, these people are now left with the dilemma of where to stash their hard earned cash.

Throughout this article we are going to discuss the various options available to you, weighing up the advantages and disadvantages of each account:

Instant access accounts

If you’re looking to grow your savings then realistically, an instant access saver is not the best option for you. Rates rarely beat 1.5% and with inflation sitting at around 3% – you’re money isn’t going to be growing.

However, where instant access accounts are helpful is when you’re looking to build an emergency fund. The fact that you can access your money as and when you need it makes them the perfect emergency saver account.

Fixed Rate Bonds

Fixed rate savings accounts offer better rates than instant access accounts however they are not going to set the world alight! The top seven year bond offers 3.5% interest; however you will need to lock your money away for seven years before you can have access to it and anything you do earn will be subject to tax.

Often fixed rate bonds will require a minimum initial deposit of £5000 so these are generally designed for those with larger amounts of savings rather than someone who is just looking to establish some.

Cash ISAs

Generally, the fixed rate cash ISAs will offer the best rates with the current market-leading four year deal offering rates of 2.75%. However, if you want instant access to your money then you’re only likely to get rates of around 1.80%.

The main attraction of Cash ISAs is the fact that anything you earn is tax free which means that rates you see are the rates you get.

Peer-to-peer savings

An alternative option to the traditional savings account is to become a peer-to-peer lender. This works on the basis that you lend your money to borrowers and then receive interest as and when the borrower repays the loan. Despite being subject to tax, the interest you will receive by becoming a peer-to-peer investor will be very attractive – even a higher rate taxpayer could earn almost 3.5% net interest.

The great thing about peer-to-peer investing is that you choose how much money you lend, how long to lend it for and your projected return. You are then free to do whatever you want with the monthly repayments you receive.


Despite savings rates being at their lowest point for a number of years, you shouldn’t be completely put off the idea of saving. After all, having some savings ultimately safeguards you against financial problems that you could run into.

When deciding what savings account is most suitable for you there are a number of things to take into account:

  • What are your savings intentions?
  • Will you need instant access to you money?
  • Have you already established savings or are you just starting out?

If you’re just starting out and need instant access to your money then an instant access account or a cash ISA maybe the most suitable option for you. If you’ve already established a relatively significant amount and are looking to get the most you possibly can out of it then a long term fixed rate account or peer to peer investing may prove the best option.


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