The Money Saving Expert highlighted the government’s Help to Save scheme and regular saver accounts offering up to 7.1% interest during his BBC podcast
Martin Lewis has discussed a DWP scheme that savers might wish to consider. The consumer expert offered several tips on building savings during an episode of his BBC podcast.
He dedicated a significant portion of the programme to examining mortgage overpayments and whether this strategy is more advantageous than placing money into savings accounts.
One listener asked about what to do with a lump sum of £90,000 that they were about to receive. They were paying a relatively high mortgage rate of 5.6 per cent and asked for advice on how to use the money.
Mr Lewis said his general principle is that if your mortgage rate surpasses the highest after-tax savings rate available, it may be more sensible to overpay your mortgage rather than deposit cash into savings. Responding to the question, Mr Lewis initially stated that “you cannot earn 5.6 percent in savings”.
He pointed out certain savings vehicles where this rate can be exceeded. He mentioned briefly: “With the exception of a Help to Save if you’re on Universal Credit or a regular saver where you can put a couple of hundred quid a month in.”
The Help to Save scheme is worth considering if you’re receiving Universal Credit, as it offers a 50 per cent bonus on deposits. Through the scheme, you receive a 50p bonus for every £1 you deposit into the account over a four-year period, reports the Mirror.
You can contribute between £1 and £50 each month, meaning you can save up to £2,400 over four years, earning up to £1,200 in bonuses. Savers receive their bonuses across two stages, with the first payout arriving after the initial two years, calculated on the highest balance achieved during that period.
The second bonus comes at the conclusion of year four, determined by the highest balance reached in years three and four. When it comes to regular saver accounts, you can get rates of over 7 per cent, but there are restrictions on monthly deposits.
Take Nationwide Building Society’s Flex Regular Saver, for instance, which offers 6.5 per cent but caps monthly contributions at £200. By depositing the maximum amount, savers could pocket £84.50 annually in interest.
Currently, Zopa leads the market with its Regular Saver offering 7.1 per cent, allowing customers to stash away up to £300 monthly. Financial experts are forecasting further cuts to the Bank of England’s base rate this year.
The rate presently stands at 3.75 per cent. The central bank opted to maintain this level in its most recent announcement.