He shared several tips about how to build up your savings
Martin Lewis shared some tips on his BBC podcast(Image: ITV)
Martin Lewis has drawn attention to a DWP scheme that could benefit savers. The consumer champion offered a wealth of guidance on building up savings during an episode of his BBC podcast.
He devoted a significant portion of the programme discussing mortgage overpayments and whether it’s better to do this instead of depositing money into savings accounts. One query came in from a person who was due to receive a windfall of £90,000 shortly.
They were on a comparatively steep mortgage rate of 5.6 per cent and wanted advice on what to do with the money. Mr Lewis’ standard principle is that if your mortgage rate exceeds the highest after-tax savings rate available to you, it may be more beneficial to overpay your mortgage instead of placing cash in savings.
Addressing the question, Mr Lewis stated initially that “you cannot earn 5.6 percent in savings”. Nevertheless, he highlighted certain savings products where you can surpass this rate.
He mentioned in passing: “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 initiative is worth looking at if you’re receiving Universal Credit, as it provides a 50 per cent bonus on what you contribute.
Through the programme, you receive a 50p bonus for every £1 you deposit into the account over a four-year term. You can contribute between £1 and £50 each month, allowing you to accumulate up to £2,400 over four years, securing you up to £1,200 in bonuses.
You receive the bonuses across two stages, with one payment made at the conclusion of the initial two years, calculated on your highest balance saved during that period. Your second bonus arrives at the end of year four, determined by the highest balance saved in years three and four.
Regarding regular saver accounts, rates of more than 7 per cent are available with these accounts, though there are restrictions on monthly deposits. For instance, Nationwide Building Society offers 6.5 per cent through its Flex Regular Saver, but you can only pay in up to £200.
By depositing the maximum amount, you could generate £84.50 annually in interest. The current leading rate comes from Zopa, offering 7.1 per cent with its Regular Saver account. This account permits monthly deposits of up to £300.
Experts are forecasting the Bank of England will continue reducing the base rate this year, which presently stands at 3.75 per cent. The central bank opted to maintain the rate at this level in its most recent decision.