In recent months there has been considerable interest in NS&I’s Inflation-Beating Savings (otherwise known as Index-linked Savings Certificates), particularly with the recent increase in inflation

This product is - in principle – straightforward, but there are a number of aspects that potential customers should understand before deciding to invest.  The five key questions are as follows:

Latest guide to which bank owns which brands, courtesy of Moneyfacts.

1.     Use your personal allowance

The basic personal allowance of £6,475 is the amount of income most of us are entitled to in this tax year (2009/10). 

It can be very tax efficient to transfer income producing assets from a 40% tax payer to a non-working spouse or civil partner. Eg a 40% tax payer has savings valued at £100,000 which are yielding 5%, so generating £5,000 on which they are paying £2,000 in tax. By transferring this to their non-working spouse they could save £2,000 in income tax.

Today’s rate cut will be further cheering news for many mortgage borrowers, who have seen unprecedented falls in their repayments over the past few months.  However, the cut will pass many borrowers by, and will actually be bad news for many people, too – especially savers.

Make the best of a bad savings market - find the best deal here

A guide to Who Owns Whom among the banks and what your compensation rights are

From October 7, 2008, your savings are guaranteed by the Financial Services Compensation Scheme up to £50,000 with any company holding an individual banking licence.  The protection applies per person per institution – not per account.

Joint accounts are divided 50:50 between the account holders. If you have one joint account your guarantee is effectively doubled to £100,000. If one party has another account with the same institution this will affect the amount of compensation available on the joint account.

So if Mr A has £35,000 with Bank X, and Mr & Mrs A jointly have £65,000, also with Bank X the FSCS compensation will be limited  to £50,000 for Mr A and £32,500 for Mrs A, not to the £100,000 which some would expect given that the limit is £50,000 per person.

You may be patting yourself on the back after you have signed up for a great high-interest account, but you should still keep a close eye on your cash. Payouts can plunge dramatically the more you put in the account, and with some accounts demanding a minimum pay-in per month, that can happen faster than you think and suddenly the generous slices of interest you have become used to have shrunk to a measly crumb.

From 6 April 2008, the amount of money you can put in an Individual Savings Account (ISA) will increase to a total of £7,200 per annum. This includes a new limit of £3,600 – up from £3,000 in the last tax year – that can be held in cash. The remainder can be invested in stocks and shares.

Getting children into the savings habit is more important than ever, now that young people are likely to start their independent lives with bills and student debt. Children need to learn to look after their own money – and if you can start them off with a savings plan to defray some of their costs when they eventually leave home, so much the better.