Financial guru Martin Lewis has issued a warning regarding saving accounts and is urging everyone who has one to check theres now. This comes as the Bank Of England has increased the interest rate.
In the latest MoneySavingExpert newsletter, the founder warned that if the interest rate on your savings account is under 1.5 per cent, then you need to act now to boost it up. He added that the very least anyone should be earning on savings is 1.5 per cent.
As the Daily Record reports, Martin said that it’s “never been more important to maximise every penny of savings interest”, highlighting the current cost of living crisis and soaring inflation rates.
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While many of us assume that it's a job well done to put cash into a savings account and forget about it until we need it, Martin and the MSE team stressed that we could be missing out on so much more with the interest rates that are available now.
Martin explained: “It's never been more important to maximise every penny of savings interest. With inflation roaring, in real terms money in savings is shrinking. To mitigate the impact, you need as high a rate as possible.”
He added that while inflation is squeezing the purse strings of many, interest rates for the top deals are increasing, with some longer fixes edging towards three per cent. Although he said with caution that saving rates tend not to 'bounce up' in the same way mortgage rate do.
Even after a five base rate rise, some saving rates still pay just 0.01 per cent - so everyone should "check what you get ASAP". Along with that warning, the consumer champion shared a handy list of savings need-to-knows which includes easy access savings which are a popular choice for people looking for flexibility and the ability to put money in and take it out when they want.
The guide highlights current deals from:
- Chase - 1.5 per cent AER
- Virgin Money's M Plus - 1.56 per cent AER
- Atom Bank - 1.35 per cent AER
- Aldermore - 1.35 per cent AER
Find out more details about the current top easy-access savings accounts on MSE.com here.
Martin also shared the current top fixed-rate savings accounts too, find out more here.
Another option many people on a low income is the Help to Save Scheme.
Help to Save
Martin is encouraging people claiming Universal Credit or Tax Credits to look into an “unbeatable” bonus scheme offered by the UK Government. This came after a MSE fan thanked Martin on social media for sharing details about it.
Help to Save offers people on low income the opportunity to earn a maximum amount of £1,200 over a four-year period. Although, how much you get back relies on how much you put in that year with the 50 per cent bonus being based on your highest total savings amount.
Below is everything you need to know about the scheme.
What is Help to Save?
The Help to Save account is a scheme which millions of people on a low income, or claiming certain benefits, could be eligible to join.
The state operated scheme offers people entitled to Working Tax Credits or receiving Universal Credit to get a bonus of 50p for every £1 they save over a period of up to four years. While it is also possible to take the money out from the account - the bonus payout is based on the highest amount of money you put in.
Even if you’re not able to set aside money for savings at the moment, open an account anyway, while you are eligible to do so, because you don't even have to put any money in to open it.
How the Help to Save scheme works
The scheme allows certain people entitled to Working Tax Credit or receiving Universal Credit to get a bonus of 50p for every £1 they save over four years.
Help to Save is backed by the UK Government so all savings in the scheme are secure.
How payments work
You can save between £1 and £50 each calendar month - you don’t have to put in money in every month and payments can be made by debit card, standing order or bank transfer.
The most you can pay in each calendar month is £50 and if you want to withdraw money from the Help to Save account, it can only get transferred to your bank account - you're not able to take money out from an ATM, for example.
How bonuses work
Based on how much you have saved, you can get bonuses at the end of the second and fourth years.
What happens after four years?
After four years, the Help to Save account will close. You will not be able to reopen it or open another Help to Save account.
You can close your account at any time. If you close your account early you will miss your next bonus and you will not be able to open another one.
Eligibility
You can open a Help to Save account if you are:
Receiving Working Tax Credit
Entitled to Working Tax Credit and receiving Child Tax Credit
Claiming Universal Credit and your household earned £604.56 or more from paid work in your last monthly assessment period
Getting payments as a couple. You and your partner can apply for your own Help to Save accounts - you need to apply separately
You also need to be living in the UK.
Will it affect my benefit payments?
You can continue to receive Tax Credits or Universal Credit while saving with Help to Save.
What happens if I stop claiming benefits?
You can keep using your Help to Save account.
For more information and to set up your Help to Save account, visit the GOV.UK website here.
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