Martin Lewis tells Brits with £8,000 in savings to check their bank accounts now

31 July 2023 , 08:22

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Martin Lewis tells Brits with £8,000 in savings to check their bank accounts now

Martin Lewis has issued a warning to anyone with more than £8,000 in savings.

The MoneySavingExpert.com founder has advised those with bigger savings pots to check whether their money was getting the best interest rate available. Martin told listeners of his BBC podcast that searching for better rates could result in hundreds of pounds of interest rolling into their savings accounts

He said: "It’s time for millions to reopen cash ISAs. The top pay 5.7%, and with rates rising, anyone with £8,000 in savings, check now if your money’s in a cash ISA. Cash ISAs usually pay slightly less than the equivalent normal savings. So it’s only for those people who would pay tax.

"So it’s roughly over £8,000 for a lower rate taxpayer and £16,000 for a higher rate taxpayer, over those amounts are when you want to start looking at it."

Martin Lewis shared the advice on a recent episode of his BBC podcast (Ken McKay/ITV/REX/Shutterstock)

Martin advised those who opened a cash ISA more than six months ago to "ditch it" because the "rate will be terrible". The MSE founder also told listeners to take the hit of a penalty to leave their ISA if it is not paying a high enough rate.

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He added: "You will have to pay a penalty to get out but generally you will earn more in the new ISA than the interest penalty will cost you because an interest penalty where the interest isn't very high isn't that much."

Martin then walked his listeners through some of the top options currently available at the moment and urged people to check what the best option was for them as soon as possible.

He said: "On easy access savings, Chip pays 4.51%. The top Cash ISA Leeds Building Society and Principality pays 4.2% so normal savings are beating cash ISAs. If you are paying tax though, that Chip pays 4.5% but if you were paying 20% tax on chip, then after 20% tax your equivalent rate is 3.16%.

"If you were paying 40% tax, your equivalent rate is 2.7%, way lower than you would get in a cash ISA. Vanquis Bank pays 6.15% as the top one-year fix in normal savings. Natwest is paying 5.7% in its top cash ISA one year fix."

Ruby Flanagan