Get even with the greedy banks in just 10 minutes

Interest rates for savers are down but you can still squeeze more out of the greedy banks by using our top tips to make the most of your cash.

1. Use your individual savings account (Isa) allowance to make the most of your tax break. You can put £3,600 into a cash Isa before April 5, or £5,100 if you are over 50, and you will have all of your interest paid to you tax free. Shop around for the best deal, but you can currently get 2.65 per cent with Standard Life Bank on balances of £1 or more, on a no-notice Isa.

2. Choose the top paying account

If you have used your Isa allowance for this year, then look at the best paying alternative accounts. If you do not want to give any notice before withdrawals, then Alliance & Leicester’s Online Saver is paying 3 per cent, on just £1 deposit.

Get a notice account

Tying your money up, even for a short time, can help to raise the interest you can get. Investec Bank is paying 3.32 per cent on balances of £25,000 or more, with a notice period of three months for withdrawals.

FirstSave is paying 3.25 per cent on deposits of £100 or more, with a 90 day notice period.

Fixed term bonds

By tying your money up for longer, you will get even more. Nationwide has a series of e-bonds, with the highest rate available at 5 per cent on a five year bond. The minimum deposit is £1.

3. Consider regular savings but watch the catch

Regular savings accounts often pay more than many other accounts, but don’t be fooled. The banks pay higher rates on these because they usually have a fixed term, and that rate is only paid on one portion of the overall deposit.

At the moment, you can get 4.5 per cent with Principality Building Society, and you can deposit a minimum of £20 – £500 a month. Depositing £500 a month, with the rate fixed at 4.5 per cent a year, means you will get that full rate on the first month’s deposit only.

The next month’s deposit you would get 11/12ths of that amount, then 10/12ths and so on.

4. Teach your children about money

Use any Christmas money your children have left over to teach them about how to save. Any child born after September 1, 2002 will have a Child Trust Fund, which can be topped up by family and friends to the value of £1,200 a year. This grows tax free, and can only be accessed by the child at age 18, although they can decide how the money is managed from age 16.

If that has already been done, then get them a children’s account to help them learn to save. Halifax is paying 6 per cent on the Children’s Regular Saver, and the minimum deposit per month is £10, with a maximum of £100.

5. Make sure you are not paying tax if you don’t need to

If you are not earning or you are earning too little to pay tax, then tell your bank or building society. You need to fill in form R85 so that your interest is paid gross, rather than net of savings tax – currently 20 per cent. This applies to children’s accounts too.

If your spouse is a non-taxpayer, or is a 20 per cent rather than higher rate taxpayer, then it may be worth putting your savings into his or her name. It is perfectly legal, and is a good way of reducing the tax you pay on your interest.