Spring Clean Finances (Part One) | moneyfacts.co.uk

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Rachel Springall

Rachel Springall

Finance Expert & Press Officer
Published: 30/03/2022

As consumers deal with the rising cost of living they may now be looking to clean up their finances. Moneyfacts has prepared some top tips for those who spend, save, and how much they could save by switching their existing accounts.

This month marks the second anniversary of the UK first going into lockdown, and its effect was detrimental to many consumers and businesses alike. Some were able to survive financially throughout the pandemic, but others were not so fortunate. The influence the pandemic has created on the mindset may have drastically changed how someone spends their cash today, and now planning for uncertainties is much more of a priority.

Automate your savings

Saving little and often is the key to building a nest egg and there are now apps that can do this automatically. Chip is a free app that makes automatic deposits based on a user’s spending habits by connecting to a current account through Open Banking. There are other automated savings apps around too and, as it can be difficult for consumers to get into the right mindset to save, even downloading an app can be a good starting point. If someone saved £3 a day, they could accumulate almost £100 in a typical month.

Take advantage of ISAs

ISAs can be beneficial to savers not just for their tax-free wrapper, but those looking to save up for their first home or retirement can get a Government bonus of 25% on their investment with a Lifetime ISA. ISAs are also much more flexible than they used to be, as savers can now withdraw their cash with ISAs that fall under Flexible ISA rules, however not every provider offers this option. Savers could discover providers that also allow them to split their cash ISA savings across fixed and variable products in one place, ideal for those who want to spread their cash between easy access and lock into a higher rate. Savers may also be eligible for a Personal Savings Allowance, which allows basic rate taxpayers to take home up to £1,000 worth of savings interest tax-free each year (£500 for higher rate taxpayers), so it’s worth comparing deals away from ISAs carefully with this in mind.

Open an easy access account as a safety net

Easy access accounts are a sensible option for consumers looking to squirrel away a bit of cash for emergencies. Interest rates are also on the rise for these accounts, on average they return 0.30% based on a £10,000 deposit, which is the highest return since June 2020. The top rates are improving at a decent pace, and some deals now pay 1%, the highest return since November 2020 when NS&I held the top spot. In the weeks to come we may see even more top deals on the market, and due to their flexibility, savers can simply switch if they find something better.

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