Britons are urged to check if they can apply for a “little-known” savings account that offers a 50 percent bonus interest rate.
The Help to Save account, which is Government-backed, is available to those who claim Universal Credit or Tax Credits and runs for four years.
Previously raising awareness of the account to ITV viewers, financial journalist and host of the podcast, Money Clinic, Claer Barrett described it as a savings account that pays the equivalent of 50 percent interest “that not a lot of people know about”.
Savers can deposit between £1 and £50 each calendar month, with no obligation to contribute every month. Multiple deposits are allowed, as long as the total doesn’t exceed £50 per month.
The tax-free bonuses will be credited at the end of the second and fourth years, and the amount is based on how much the person has saved. Over four years, this account can help people build up a savings pot of up to £3,600, including interest, making it a simple and effective way to grow their money.
Who is eligible for a Help to Save account?
To open a Help to Save account, savers must be receiving the following benefits:
- Working Tax Credit
- Child Tax Credit – and are entitled to Working Tax Credit
- Universal Credit and the claimant (with their partner if it’s a joint claim) had take-home pay of £793.17 or more in their last monthly assessment period.
For those who receive benefit payments as a couple, the person and their partner can apply for their own Help to Save accounts, but they will need to apply separately.
Savers must also be living in the UK, although people who live overseas can apply if they or their partner is a crown servant or a member of the British armed forces.
How do the Help to Save bonuses work?
People can earn two tax-free bonuses over four years. Savers will get any bonuses they’ve earned even if they withdraw money.
After the first two years, savers get a first bonus if they’ve been using their account to save. This bonus will be 50 percent of the highest balance they’ve saved.
After four years, they’ll get a final bonus if they continue to save. This bonus will be 50 percent of the difference between the following two amounts:
- The highest balance saved in the first two years (years one and two)
- The highest balance saved in the last two years (years three and four)
If the highest balance does not increase, savers will not earn a final bonus.
The most people can pay into their account each calendar month is £50, which is £2,400 over four years. The most that can be earned from the savings in four years is £1,200 in bonus money. This would amount to a sizeable £3,600 worth of savings.
The bonus is paid into the person’s bank account, not the Help to Save account.
The Help to Save account will close four years after it’s opened and the saver will not be able to reopen it or open another one. Withdrawals can be made if needed, however, it may make it harder to grow the highest balance and earn the largest possible bonuses.
A statement on the Government website reads: “Withdrawing money could mean you are not able to earn a final bonus – depending on how much you withdraw and when.”
To apply for the account, savers will need their Government Gateway user ID and password, as well as their UK bank details.
