‘Unbeatable’ bank account for millions on Universal Credit that could help you save £1,200
MILLIONS of people on Universal Credit could earn £1,200 in free cash with an “unbeatable” bank account.
Help to Save is a type of savings account that gives you a 50% bonus on any money you squirrel away.
Anyone on Working Tax Credit or receiving Universal Credit can open one.
You can pay in between £1 and £50 each calendar month and save into the account for up to four years.
The bonuses are paid at the end of the second and fourth years, with the maximum bonus worth £1,200.
If you paid in the maximum of £50 a month for a year then you could earn £300 over the year.
But if you opened the account now and paid into it until the new year then you would earn £125.
The scheme has paid out millions of pounds to more than 500,000 people since it was launched in 2018.
Meanwhile, MoneySavingExpert founder Martin Lewis has described the account as “unbeatable”.
But David Cameron, who launched Help to Save when he was Prime Minister, said up to 3.5million people could be eligible for the scheme, meaning millions are missing out.
How does Help to Save work?
Help to Save is a type of savings account that is available to people who receive Tax Credits and Universal Credit.
The scheme is government-backed so all of your money is protected and you will not lose anything you pay in.
You can open a Help to Save account if you are receiving Universal Credit and you had a take-home pay of £1 or more in your last monthly assessment period.
Your take-home pay is your pay after deductions such as tax or National Insurance.
If you stop claiming benefits you can keep using your Help to Save account.
One thing to consider is that if your Help to Save cash means you have more than £6,000 in personal savings, it can affect whether you are eligible for some benefits and how much you get.
How you can find the best savings rates
If you are trying to find the best savings rate there are websites you can use that can show you the best rates available.
Doing some research on websites such as MoneyFacts and price comparison sites including Compare the Market and Go Compare will quickly show you what’s out there.
These websites let you tailor your searches to an account type that suits you.
There are three types of savings accounts fixed, easy access, and regular saver.
A fixed-rate savings account offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw but it comes with a hefty fee.
An easy-access account does what it says on the tin and usually allow unlimited cash withdrawals.
These accounts do tend to come with lower returns but are a good option if you want the freedom to move your money without being charged a penalty fee.
Lastly is a regular saver account, these accounts generate decent returns but only on the basis that you pay a set amount in each month.
If you or your partner have £6,000 or less in personal savings, this will not affect how much Universal Credit or Housing Benefit you get.
This includes any savings in your Help to Save account, including bonuses.
Any savings or bonuses you earn through Help to Save will also not affect how much Working Tax Credit you get.
Are there any other options?
If you’re not on Universal Credit or Tax Credits so don’t qualify for a Help to Save account, you do have some other options.
It is always a good idea to have an easy-access savings account so you can withdraw money whenever you need to.
But make sure you read the small print as some have withdrawal limits which if you breach could mean your interest rate falls.
At time of writing, you can get 5% on savings of up to £3,000,000 with Chase Bank and there is no minimum pay in.
Meanwhile, you can earn 4.75% with Atom Bank and can open the account with just £1.
But if you make a withdrawal in a month then the rate drops to 2.5%.
Another option is a regular savings account, which allows you to put money away each month and the interest is paid yearly.
These accounts offer higher interest rates than traditional or easy-access savings accounts but usually impose rigid rules such as limiting the number of withdrawals you can make.
They will also usually cap how much you can save.
Zopa customers can earn 7.1% interest on up to £300 a month with its regular savings account.
To be eligible you need to have a Zopa “Biscuit” current account.
First Direct will give you 7% interest if you pay in between £25 and £300 a month into its regular savings account.
If you paid in the maximum £300 a year then you would earn £135 a year in interest.
But if you close the account early then you will only get 1.75% interest.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
