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Derin Clark

Derin Clark

Online Reporter
Published: 06/07/2021

Although many were able to boost their savings during lockdowns, over a quarter of consumers have less than £500 in savings and one in 10 have no savings at all, research from Yorkshire Building Society has found.

The lack of accessible savings not only puts consumers in danger of falling into debt in the event of an emergency but can also result in them struggling to pay for upcoming special occasions. “Building a savings pot for the future is a vital way to avoid short-term credit and instil a positive habit,” explained Rachel Springall, finance expert at “In a low interest environment, it would not be too surprising to find savers apathetic to open an account or chase down a better savings rate, but it’s important that they shake off this attitude and instead seriously consider how they will afford to cover unexpected purchases or a sudden increase in their monthly expenses, such as the cost of the festive season.”

She added: “If someone were to put away just £25 a week for the next twenty weeks, they would amass £500 and still have enough time to do their Christmas shopping.”

Best accounts for starting a savings fund

Often the most popular choice for those looking to start a savings fund is with an easy access savings account. Although these accounts usually pay lower interest rates compared to other types of savings accounts, they have the flexibility of allowing savers to add and withdraw funds instantly. Savers considering opening an easy access savings account should be aware, however, that some accounts have restrictions on how many or when withdrawals can be made.



For those who often struggle to save, a regular savings account could be a good way to start a savings habit. These accounts normally require savers to deposit a pre-determined amount each month into the account for a set period of time – often 12 months. Although interest rates on these accounts can seem very generous, savers should be aware that interest is calculated differently to other types of savings accounts. Read our guide on why regular savings accounts seem to pay the highest rates to find out more about how interest is calculated on regular savings accounts.

Another option to those starting a savings fund is a notice account. Similar to easy access savings accounts, notice accounts allow savers to make further additions whenever they choose. A significant difference, however, is how money is withdrawn as savers must give notice before making a withdrawal from the account. The notice period varies depending on the account but often the highest paying notice accounts have the longest notice period. For example, the top-paying accounts in the notice account chart have a notice period of 120 days.

How to start a savings fund on a low income

Those on a low income may struggle to put money away each week, but if they are able to save, a Help to Save account may be a good option. Springall revealed: “Those on a low income could open a Help to Save account, which is an initiative from the Government designed to encourage working people on Tax Credits to save. The scheme pays 50p per £1 saved up to a maximum bonus of £1,200 over four years. HMRC statistics indicated that more accounts have been opened and deposits rose, which is positive to see, but as part of the same research, thousands of accounts were opened but no deposits were made. The financially unstable would be wise to work out their overall household expenditure and, where they can, cut back and save. There are simple ways to start budgeting, for example by using a free mobile app like Money Dashboard.”

When to start a saving fund

When to start a savings fund will depend on the consumer’s personal financial circumstances, but those who have disposable income may want to start regularly putting money into a savings account as soon as possible to help build an emergency fund. Alternatively, if possible, it may be worthwhile reducing monthly outgoings to free-up money to put into a savings account.

A good way of reducing monthly outgoing is by reducing or clearing debts, such as money owed on credit cards or loans. For tips on how to pay-off debt read our guide 12 steps to clear your debt .

Options for consolidating debt

Transferring credit card debt to a 0% balance transfer credit card can make it cheaper and quicker to clear the debt. Alternatively, if you have debts with various lenders, such as multiple credit cards and personal loans, consolidating the debt with a personal loan could be a good option. If you have a significant amount of debt, a secured loan may be an option to consolidate your debt, but this should only be considered by those who are confident that they will meet the repayments as failing to do so could result in you losing your home. If you are struggling with debt it is important to get professional advice by speaking to a free debt advice charity, such as Citizen Advice.


Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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