The Help to Save scheme has been introduced by the government and could see your savings boosted by 50 pence for every £1 you put in. Take a look to see if you qualify.
Let’s be honest, for the majority of us, saving money comes quite far down the list when it comes to priorities. I can’t blame people either. At the beginning of 2018, the average ISA rate stood at 0.78% whilst inflation was just over 2%. In simple terms that means put your money into an ISA and by the time you withdraw it, you’ll be able to buy less.
So the government has tried various ways to encourage us to save. There is a Help to Buy ISA, which obviously only helps those who want to buy their first home. Then there’s the Lifetime ISA which only the under 40’s qualify for and means you can’t touch it until you reach 60 unless you want to be penalised.
These schemes have been met with some success, so the latest one to be introduced is the Help to Save.
What is Help to Save?
It may shock you… but it’s a savings account. But it’s quite generous compared to any other because for every £1 you put in, you could get up to an extra 50 pence bonus.
How does it work?
The scheme is available over 4 years and you are allowed to pay in a maximum of £50 per calendar month. But if money’s a bit tight, you don’t have to as you’re not obliged to keep making payments.
After 2 years of opening your account, you’ll receive your 1stbonus. This is calculated from using the highest balance you’ve saved. So if you’ve managed to save £500 then you will receive a £250 bonus. Even if your account stands at £0 when the bonus is due, if at one point it reached £500, that’s the amount they use to calculate the bonus. The bonus you earn is paid straight into your bank account.
The 2nd bonus will be paid into your account after 4 years. This bonus only includes money you have saved above your previous maximum. For example, if you saved £500 in the 1st 2 years and reach £800 in year 4, the bonus will be paid on £300 (£800 – £500).
Your Help to Save account will automatically close after 4 years and you cannot open another.
Who is eligible?
Taken from the government website:
You can open a Help to Save account if you’re either:
entitled to Working Tax Credit and receiving Working Tax Credit or Child Tax Credit payments
claiming Universal Credit and your household income in your last monthly assessment period was £542.88 or more
If you open a Help to Save account and you stop claiming benefits, you can still keep the account.
Is it safe?
The scheme is backed by the government so your money is secure.
Will it affect my benefits?
Saving money through a Help to Save account could affect your eligibility for certain benefits if you have savings elsewhere. It’s important you know the possible consequences. You can find out more here. https://www.gov.uk/get-help-savings-low-income/how-it-will-affect-your-benefits
Is it worth it?
It certainly is. This is a great way to encourage people to save at a time when interest rates are so low. But it is questionable whether people will continue to save once their 4 years is over. However, it’s still worth trying.
I do have a problem with the fact that people with no interest in saving could just pay £50 into the account, withdraw it immediately and 2 years later they receive a £25 bonus. Still, it’s an easy money spinner I suppose.
To find out more about the Help to Save scheme, visit the government website.