Financial journalist and campaigner Martin Lewis regularly appears on a number of shows, sharing his money saving tips and financial insights. On Monday, he answered a whole host of questions from BBC Radio 5Live viewers, during The Emma Barnett Show.
Responding to the query about high interest savings accounts, Martin replied: “There are no high interest savers.
“I have never seen a savings scenario like we have right now.”
He then turned his attention to highlighting the current top paying savings accounts which are available to savers at the moment.
“The top payer on the market is NS&I Income Bonds at 1.16 percent.
“There’s nothing else over one percent easy access.
“There’s nothing over one percent for a one year fix. You can get 1.16 percent if you lock your money away for two years with PCF Bank.
“For five years, if you locked away for five years, you can get a paltry 1.4 percent.
“I mean, the classic answer is reduce your debts if you’ve got them, that would be the first look – there’s lots of caveats to that so treat it as a general concept.”
Martin also highlighted how some may be able to access higher interest rates via a regular savings account.
“But, in that generally, if you withdraw it, you face a 25 percent penalty which effectively means you net lose six percent, so just think of that.”
However, the 25 percent penalty has been paused for the current tax year due to the coronavirus crisis, as Martin pointed out.
“So I’d probably be opening up a Lifetime ISA now while you’re not sure what to do with your money. The interest rates aren’t great but if you are going to use it to buy your first home, then you would get that 25 percent boost and you need to hold it for a year before you buy a house and you’re allowed to get the boost on it.
“But if you change your mind before the end of this tax year in next April, withdraw it and you can take your money out without any consequence.”
The Ask Martin Lewis Podcast is available now on BBC Sounds.