UK Money 2010 - New Incentives For Savers

During ongoing recessionary times it is becoming more and more important to put a little bit of money away each month in order to ensure financial security for the future. Despite the general acknowledgement among the UK public that this is a logical and sensible habit to get into, it has clearly been difficult for banks to be able to offer great incentives for prospective savers to open an account.

Little reason to save has been reflected by significant changes reported recently by finance experts, moneyfacts.co.uk. The website highlighted a trend stimulated by low interest rates, showing that many people are using their money to go towards paying off their debts instead of storing it in a savings account. The research also posited the notion that the UK public believe if they haven't got the money, they won't spend it.

Yet, incentives to save are on the horizon, and the question remains whether such changes are a positive signal for the UK economy. The first group of prospective savers to benefit are those who are aged over 50. They will now be allowed to deposit up to £10,200 (half in cash half in stocks and shares) into tax-free Individual Savings Accounts (ISAs) - an amount that has increased from £7,200. The increase will be available to everyone else after the 6th April, 2010.

Although the changes have not been seen a positive response from all corners of the media (The Sun described how 'pensioners won't be feeling much benefit if their ISA returns are so low anyway'), these changes at least herald a growth inn opportunity for those eager to save but were unsure where to put their cash - and each provider will be eager to allow different ISA options to differentiate themselves from the next.

Aside from ISAs, fixed rate accounts are still offering the best returns for savers, yet - as is the case with ISAs - you must be prepared to leave you cash locked up for some time to get the best from it. So-called 'Notice Savings Accounts' are often a good way to sacrifice some of the interest you will incur over a term for the benefit of some extra flexibility - but as with any money decision at the moment, it is always best to shop around and do your research first.

Paul Roberts writes about ISAs, savings and high interest savings account.