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From 6 April 2008, people will be allowed to save up to £3,600 in a cash ISA and up to £7,200 in a stocks and shares ISA, within a total annual savings limit of £7,200.

Richard Saunders, from the Investment Management Association said: “It is good to see the Government recognising the importance of ISAs in the UK savings market. But a 3% increase after nine years is not much and we will look for more in the future”.

This will be good news for the plus 16 million investors who together have policies worth more than £180bn.

As it stands, each tax year, someone can invest:
• Up to £3,000 in a cash mini ISA
• Up to £4,000 in a stocks and shares mini ISA
• Or up to £7,000 in a maxi ISA, of which up to £3,000 may be in cash

However, from April 2008, someone who chooses to save the maximum £3,600 cash each year will then only be able to invest a total of £3,600 in stocks and shares, £400 less than the current allowance.

ISAs have been increasing in popularity since their introduction in 1999 mainly because they provide tax free savings.

Last December the government announced that, to help savers further, any cash already saved in ISAs could be kept in the account without eating up the next year’s savings allowance. This would mean the balance could increase over the years and accrue more interest.
 

UPDATE: Since writing this article, compareandsave.com have published a ‘Guide to savings accounts’ which has a whole section dedicated to explaining ISAs

Read the Individual savings accounts (ISAs) mini-guide

Compare ISA savings accounts here

You may have opened this article thinking that I was going to tell you a great money making scheme that would have you rich at the end of each month. Unfortunately, I’m not going to do that. What I am going to do is to give you a great tip on how to make your money last a bit longer.

If you have a current account, it is likely that you have your wages paid into it each month. Then you use your card to access this money whenever you go shopping or go out on the town in the evenings. With all of that money sitting in your account, you can buy anything you want even if it is a complete impulse purchase. 

My housemates were typically running out of money at the end of the month, so much so that one of them couldn’t afford to get the bus to work without borrowing money from someone. I suggested to them that they get an instant access savings account (such as the ‘eSaver’ offered by Abbey, currently offering 6.40% AER) and use it alongside their current account. 

The first thing to do with your wages is set aside enough money to pay for your bills and food for the month ahead. Try to think of everything you are likely to need to buy to survive for the month, this includes expenses easily overlooked such as bus fares and phone credit. The remaining money is to have fun with.

However, if you keep all of this money in your current account it is, firstly, earning minimal interest and, secondly, very easy to spend without realising. 

If you put this excess cash into an instant access savings account that you can access online, every time you are going to go into town or on a night out you can transfer an amount of money you think you are likely to need (plus maybe enough money for emergencies such as a taxi or for phone credit). This way you don’t go home having spent all of your wages in the first week and sit at a table with a generic look of horror on your face and your head in your hands.

My housemates now have enough money left at the month to transfer into a Mini Cash ISA to save for the long term, for that much needed holiday, emergencies, a deposit on a house or whatever really takes your fancy.

Of course,  those of you who find it hard to juggle money between accounts might be better off having a current account with a high interest rate (such as the one offered by Alliance and Leicester which currently offers 6.50% AER) so that any money you do have in your account earns as much interest as possible.

If, like me, you are someone who pays their bills on time and have never been in any trouble with your providers, then you are in a very good position to get yourself some better deals. 

Reliable customers are what businesses need to keep going so they know they need to treat you well to make you stay.

Because of this, if you feel that there is a better offer elsewhere, and you tell your present provider this, they are bound to at least match it to stop you going. Why would they want to lose a customer that they know will pay them a guaranteed amount of money each month without any hassle?

I tried this with my credit card company some years ago. I had seen an interest rate offer of 14.9% advertised, miles better than the 21.9% APR I was originally given when I got my credit card 4 years previously.  So, I rang them up and asked if I was eligible for this rate and was told that it was for new customers only. I then said that I was not happy with this because for 4 years I had been the model customer and was therefore thinking of taking my business elsewhere as I was sure any other company would snap me up in a second.

I was then put through to customer retentions where I was offered 12.9% APR. This then allowed me to transfer my balance from my other credit card which has since saved me a substantial amount of money and allowed me to clear my balance a lot quicker.

This method is pretty universal and I have also received great results from trying it with phone and broadband providers. Why not give it a try and see how much you can save?

£30, £25, £20, £15 are all figures you might have seen if you have been subjected to a late payment fee or a returned payment fee.

Last year the OFT forced banks to reduce their credit card charges to no more than £12. Is this still too much? An anonymous ex-employee of Yorkshire Bank might hold the answer to this question as they revealed that it only ever cost £2 to recover the money from the account holder.

We at compareandsave.com are sure that you would like to know whether this new penalty is fair and where the money goes. First of all, let us explain to you why banks are allowed to charge a fee in the first place.
When you sign up for a bank account you are signing a contract to agree to use the account in a certain way. This contract is made up of the terms and conditions and within them are clauses that state, for example, that your account is not allowed to go into the red.

If you do happen to go into debt in your account then technically you have breached your contract. The bank could take you to court to recover their money but instead the charges are written into the terms and conditions. The bank has every right to get back the money that was borrowed without authorization plus charge you for the cost of recovering this money.

However, the law also protects the consumer and says that the bank can charge you for the actual cost of recovering the money but cannot add on a ‘penalty charge’ as well.

The question, at this point, is: how much does it actually cost the bank to recover their money?

The recent campaign to reclaim bank charges involves taking the banks to a small claims court to appeal against the amount charged. Money is usually awarded back to the claimant because banks do not wish to defend themselves. If they did they would have to provide details of the calculations it uses to come up with the amount to charge the customer.

At the end of the year, the OFT are set to announce what they consider to be a fair charge for dealing with these types of offences. Meanwhile, we would love to hear any views you have.

In recent years there has been a boom in the number of bank accounts that will offer you benefits for a fixed fee every month. If you are paying for benefits, then it is important that they are worth that extra bit of hard earned cash.

So, what can you do to get the most from accounts with benefits?

The first thing you need to work out is whether the extras offered by the account are things that you need or really want.

Most basic added value accounts, such as the Lloyds TSB Select Account, cost anything between £6 and £9 a month and tend to offer things like: 

• Small interest and fee free overdraft facilities
• Preferential rates on higher overdraft facilities, loans, mortgages and insurance
• Basic breakdown cover 
• Mobile phone insurance 

There is the option of spending more money per month and getting higher level benefits from a premier added value account which cost between £10 and £25 per month. These accounts, such as the Barclays Additions Plus Account, offer extras like:

• Family travel insurance
• Higher value interest and fee free overdraft facilities
• Comprehensive breakdown cover
• Card and identity theft protection 

To get the most of these accounts you might want to consider:

1. Which account offers the most useful things for the lowest monthly fee
2. Which of the benefits you are most likely to use – if you don’t have a car you won’t need the breakdown cover
3. Whether they are things you could get for free from other accounts or services – some accounts have small overdrafts for free as a perk of the account.

PruHealth has teamed up with auction site eBay as part of a bid to help its customers lead healthier lives.

The private medical insurer will operate a points system, which rewards policyholders for buying sporting goods on the site.

These so-called vitality points will then allow policyholders a reduction on their future premiums.

Some 40 points can be earned purchasing goods of up to £5 or more, with up to a maximum of 120 points on offer every year. Policyholders simply have to register that they are with the firm when they go onto the auction site.

The move is the latest by PruHealth to encourage customers into healthy living. Policyholders with the group can already earn points for belonging to a gym and giving up smoking.

Shaun Matison, chief executive of PruHealth, said: "We are delighted to have teamed up with eBay in such an innovative online deal where once again we are rewarding members for doing what they are already doing."

Pat Connolly, head of strategic partnerships at eBay, said: "This partnership will encourage customers who are already focusing on health and sports to consider their health insurance and how they could be rewarded further".

Copyright © PA Business 2007

The Post Office is set to start a new Christmas savings initiative in a bid to bridge a gap in the market left by Farepak.

People taking part in the Post Office Christmas Club scheme will be able to put a maximum of £1,000 a year into their accounts from January 2008.

They will then be able to access the money the following November, using debit vouchers for stores which have signed up for the scheme.

Some 200 retailers ranging from supermarkets to travel firms are already set to take part in the initiative,

It is hoped the project will go some way to filling the gap left by Christmas hamper firm Farepak, which collapsed in the lead-up to Christmas last year.

Alan Cook, managing director of the Post Office, said: "We are responding to the need for a safe and convenient way for people to put money aside for Christmas.

"We have been working on this for many months to get the best scheme possible for our customers, to provide them with a way to save small regular amounts which ensures their cash is fully protected and looked after securely for the year until they need it at Christmas."

Copyright © PA Business 2007

Homeowners are being urged to check their building insurance policies during National Maintenance week.

A website is advising householders to inform their insurance providers before they undertake any major renovation work as their cover may be invalid if they fail to report the changes.

Thousands of homeowners are being encouraged to carry out repairs on their properties in order to make them more energy efficient as the cold weather approaches.

While some smaller jobs will usually be covered as part of the existing policy, larger work such as loft conversions or small extensions may need specialist small-level insurance to ensure a home is protected.

And people who go ahead with the alterations could see their claims rejected in the event of any damage.

Fair Investment director James Caldwell said: "Britain’s love of DIY can spell disaster for some homeowners if they neglect to tell their insurers of the changes they have made.

"Whether it’s knocking down a wall, adding an extension or simply replacing the windows, you could end up out of pocket if you press ahead with the work before informing your insurer.

"For the time it takes to make the call, it is certainly worth the effort and could save you a hefty bill if things go wrong."

Copyright © PA Business 2007

Charity credit cards can offer people a great way of giving money to a good cause.

As the country gears up for Children in Need, charity credit cards are a way of giving to without incurring any extra expense.

Many donate a certain amount each time they are used, and there are a number of children’s charity credit cards to choose from.

Halifax has two children’s charity cards, Save the Children and the NSPCC, which both get £20 from the bank the first time they are used and then 0.25% of any purchases made.

The Co-op is behind The Children’s Society Card, and makes a donation of £5 for every account opened, a further £10 if the card is used within six months and then 25p for every £100 spent or transferred to the card.

And MBNA’s Great Ormond Street Credit Card gives a contribution to the hospital every time it is used.

There are also a wide range of cards that support other causes such as the Comic Relief credit card provided through the Nationwide Building Society, Co-op’s Greenpeace and Amnesty International cards and the MBNA’s Breakthrough Breast Cancer, WWF and British Heart Foundation cards.

Copyright © PA Business 2007

Winter sports enthusiasts are being urged to get fit and check their travel insurance before hurling themselves down the slopes this year.

The warning comes as research from Halifax shows more than a third of Britain’s 1.2 million annual winter sports holidaymakers are woefully out of shape.

And their lack of conditioning sees 10% suffer an injury on the pistes, while a further 19% say they have been lucky to escape serious damage after falling over.

Paul Birkhead, senior manager of pricing and underwriting for Halifax Travel Insurance, said: "We process a significant number of claims each year from skiers and boarders that have been forced to cut their winter holiday short as a result of an injury.

"Of course in the event of an accident anyone with Halifax’s Winter Sports cover can make a claim for up to £200 per week (for a maximum of two weeks) on any un-used ski-pass.

"But clearly prevention is better than the cure, and a few months of pre-holiday training can help you to cope with the strain of winter sports, as well as to build up your stamina."

Copyright © PA Business 2007