Martin Lewis’ team of monetary savings experts have issued advice on savings accounts to Universal Credit applicants.
The advice was presented in the latest edition of the MoneySavingExpert newsletter. The finance guru has urged people to check their savings rate as the UK faces a cost of living crisis.
The team said: “UK households are estimated to have set aside an additional £180billion in savings during the pandemic as many of those who could work from home had far lower costs. Yet rates of the lowest interest meant they were hardly rewarded for it.
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“The cost of living crisis means the rainy day savings have arrived for some as they may need to use those savings.”
The Money Saving Expert team also urged anyone on a low income to check if they are eligible for a huge boost under the government savings assistance scheme. They said, “For those who qualify, Help to save is unbeatable – it adds a 50% bonus on the highest amount of savings you have over two years. A lot of those who are eligible rave about it.”
Help to Save is a government savings account available to low-income workers applying for tax credits and Universal Credit. If you qualify, you’ll get an extra 50p for every £1 saved, meaning that over four years a maximum savings of £2,400 would result in an overall bonus of £1,200.
You’re free to pay as much as you want (up to £50 a month) so even if you part with £5 a month (£1.25 a week) – over two years you’ll get a £60 bonus £ taking your total pot to £180. Over four years, that would come to £360.
The scheme, designed to be “flexible and secure”, also hopes to inspire people to adopt a savings habit. How much is saved and when is up to the account holder, and they don’t need to pay every month to get a bonus. You can apply online here.
Martin Lewis warned that Help to Save encourages people in debt to save when they should be paying back their arrears, but said it was possible to get the best of both worlds.
He added: “The fact that you receive the bonus based on the highest amount you have saved, rather than the amount you actually have in there, means you can build your savings until you have an emergency that you would otherwise borrow to then use your savings instead of borrowing, but you will still be rewarded for saving in the first place.
“It’s a very smart ploy and will work for a lot of people. Of course, if you have extremely expensive debts, rather than saving, it’s better to try to clear them first.”
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