The government have launched a new Help to Save account which aims to help people on a low income put away more money.
Anyone who receives Universal Credit or who is entitled to Working Tax Credit can get an extra 50p for every £1 they put into a Help to Save account for the next four years. So, if you put £5 in one month, you'll have £7.50 by the next month.
You can put in anywhere between £1 and £50 in each month, but you don't have to put money in every single month. The accounts are also backed by the government, so all the savings you have in the account are secure.
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You can pay money into your Help to Save account by debit card, standing order or bank transfer. You will only be able to withdraw money from this account into your bank account, not directly from an ATM.
You can pay in as many times as you like, but the most you can pay in each calendar month is £50. So, if you put £5 in every day, you won't be able to put any more money in after the first 10 days of the month, until 1st of the next month.
There are also tax free bonuses that you'll receive at the end of the second and fourth years of having the account, even if you withdraw money from the account. Your first bonus after two years will be 50% of the highest balance you’ve saved, and after four years you'll get 50% of the difference between:
- the highest balance saved in the first 2 years (years 1 and 2)
- the highest balance saved in the last 2 years (years 3 and 4)
For example, if you pay in £25 every calendar month for two years, and do not withdraw any money, your highest balance will be £600. Your first bonus is £300, which is 50% of £600.
In years 3 and 4 you save an extra £200 to grow your highest balance from £600 to £800. Your final bonus is £100, which is 50% of £200. Even though you withdrew some money after your balance was £800, this does not affect your bonus.
Your Help to Save account will close four years after you open it. You will not be able to reopen it or open another Help to Save account, and if you close it early you'll miss out on the bonuses.
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