Get Paid 6% On Your Savings By Ignoring The Best Buy Tables.

What would you say if I told you that you can get more than double the interest on an instant access account than is currently listed in the best buy savings rates?

Believe it. Alliance & Leicester’s Premier Current Account is paying 6 per cent on up to £2,500 deposited in the account – providing you pay in at least £500 a month.

Play the bank’s rules and you will be quids in. Any amount over £2,500 will earn a paltry 0.1 per cent, and you have to pay in £500 a month.

So to maximise your return, deposit the full £2,500, and then deposit £500 a month, but take it out again so it is not sitting on such a low rate. The bank only needs to see the account is being used regularly, and we have checked with it to ensure this would keep you within the terms. It will.

Don’t waste double the interest

You need to think beyond the best buy tables to get the best deals on savings. Topping these tables at the minute for instant access is the Alliance & Leicester Online Saver paying 2.75 per cent on deposits of £1. While this rate is a tasty one, you can get more than double the interest on that money with the same institution by looking further than the savings accounts on offer.

You would be taxed on this interest – if you pay tax – so usually you would expect to hear the advice that you should use your individual savings account (Isa) allowance first. But this rate is so much higher than you can get on the Barclays Bank Golden Isa at just 2.58 per cent, you are better off using this ahead of your Isa to get the maximum benefit, even if you are being taxed.

For example, on £2,500 over a year at 2.58 per cent, you would get £64.50 in interest. On the Alliance & Leicester Premier Current Account at 6 per cent, you would get £150 gross, or £120 after basic rate tax of 20 per cent. Even if you are a higher rate taxpayer at 40 per cent, you would still have £90 in your pocket after a year, half as much again as the best paying instant access Isa.

Get paid even if you are overdrawn

If you can’t manage to keep that much in a single account, then Bank of Scotland is willing to pay you £5 a month for the privilege of having you as a customer in its Reward Current Account. You have to deposit £1,000 a month into the account – which most of us could cover with our salary – and then whether you are in credit or overdrawn, you will still get your fiver.

The overdraft is interest free – but you do pay a fee for each day you are overdrawn, which could become expensive if you are overdrawn a lot in a month. The arranged overdraft up to £2,500 a month costs £1 a day, and if you arrange an overdraft beyond this, you would pay £2 a day. Going into an unauthorised overdraft would cost £5 a day – wiping out your reward for the month.

Use up your Isa allowance

If you have any spare cash before April 6 make sure you use your Isa allowance to shelter any extra money from tax. But check you are getting the best rate. As the Alliance & Leicester Premier Current Account shows, the best rates are not always the most obvious ones.

You can put £7,200 into a mix of cash and investment Isas, or £10,200 if you are over 50 – this will be the level for everyone after April 6.