Today (13 March 2019) marks National No Smoking Day – the perfect day for smokers to consider quitting the habit. Not only is smoking disastrous for your health, but it can also be devastating for your wallet, with the NHS estimating that smokers could save an average of £250 each month, or £3,000 a year, by giving up for good.
Just think of what you could do with all that extra cash! It could make a huge difference to your monthly budget, and could even go a long way to boosting your emergency fund. With that in mind, we thought we'd put together a quick overview of some of the places you could save that extra money, whether you've just quit and want to save money regularly or already have a lump sum from giving up previously.
Regular savings accounts
Regular savings accounts allow you to set money aside on a regular basis, allowing you to watch your savings pot grow. They typically have several restrictions – such as minimum/maximum monthly funding amounts and penalties for missing monthly payments, and many won't let you access your money until the end of the term – but they can pay some of the best rates in the market, and for those who want to be strict with themselves about getting into a new habit, they can be ideal.
Here are the best regular savings accounts currently available:
- Saffron Building Society's 12 Month Fixed Rate Regular Saver (Issue 3).Paying a market-leading rate of 3.50% on maturity, this 12-month bond allows you to save between £10 and £200 a month, and requires you to stick to those 12 monthly payments. It also allows unlimited withdrawals, giving you peace of mind that you can access your funds should you need. It allows you to save a maximum of £2,400 over the year, nearly the full amount the typical smoker would save by quitting.
- Virgin Money's Regular Saver Issue 15. This account pays a fixed rate of 3% until 1 March 2020, and can be opened with as little as £1. Savers can squirrel away up to £250 each month and there's no missed payment penalty, and withdrawals are similarly penalty-free.
- Kent Reliance's 1 Year Regular Savings – Issue 3. This one-year bond pays a variable rate of 3% on maturity, and although it requires a minimum investment of £25 to open an account, monthly payments can then be between £1 and £500, allowing savers to stash away up to £6,000 over the course of a year. This account also allows unlimited withdrawals, though savers are required to make 12 payments a year – if any payment is missed the account will be closed and transferred to an easy access savings account.
Easy access savings accounts
If you don't want the commitment of a regular savings account but still want to be able to drip-feed money into a savings pot as and when you can, an easy access account
could be an ideal alternative. Here are some of the best deals to choose from that allow you to add to your balance*:
- Virgin Money's Double Take E-Saver Issue 10. This variable rate deal pays 1.50% yearly and can be opened with a minimum of just £1, with further additions allowed at your leisure. Withdrawals can be made without notice, though it should be noted that only two will be permitted per calendar year, including closure, so you'll need to plan your access carefully. Virgin Money also has a Man Utd version of the account, which has the same standard terms with the additional benefit that savers will be added into a monthly draw to win Manchester United prizes.
- Marcus by Goldman Sachs'® Online Savings Account. Paying 1.50% AER on a monthly basis (1.49% gross), this variable rate deal includes a bonus of 0.15% for 12 months and permits further additions and withdrawals whenever you wish, making it a true easy access account.
- Yorkshire Building Society's Online Single Access Saver Issue 17. This account pays a variable rate of 1.46% yearly from a minimum investment of £100 and allows unlimited further additions, though it should be noted that while withdrawals can be made without notice, only one withdrawal day is allowed per account year, which means this account is best suited to those who want the flexibility of being able to add to their pot along with the lack of temptation to spend.
Fixed rate bonds
If you've already got a lump sum you want to squirrel away – perhaps you quit smoking a year ago, have been saving the cash in an accessible account and now want to watch it grow – a fixed rate bond could be for you. These pay higher rates than easy access accounts on the provision that you commit to locking your money away for a set term, with withdrawals rarely allowed – and if they are, there'll usually be a penalty to pay. Further additions aren't usually permitted either, which makes these accounts only suitable for those who already have a decent sum to invest.
- Bank of London and the Middle East (BLME) currently offers the best one-year bond, with the 12-month version of Premier Deposit Account paying an expected profit rate of 2.20% on maturity. It requires a minimum deposit of £1,000, after which no further deposits can be made, and there is no access to funds prior to maturity.
- Gatehouse Bank has the top-paying two-year bond available through the Raisin platform. Raisin UK – 2 Year Fixed Term Deposit pays a market-leading expected profit rate of 2.45% yearly from a minimum deposit of £1,000, with further deposits allowed for five working days but no withdrawals. Raisin UK is also offering savers a bonus of up to £100 depending on the amount invested.
- Al Rayan Bank tops the charts in the three-year bond sector, with its 36-month Fixed Term Deposit paying expected profit of 2.52% on a quarterly basis. It requires a minimum deposit of £1,000, with no further additions or withdrawals allowed.
- Gatehouse Bank takes the crown in the long-term sector as well, with the five-year version of its Raisin UK account paying an expected profit rate of 2.75% yearly, with all other features mirroring that of its two-year counterpart.
Life insurance benefit
It wouldn't be right to talk about the financial benefits of giving up smoking and not include life insurance in the mix. We all know that our lifestyle impacts how much we pay for life insurance, and smoking can have a significant effect – just take a look at the cost of typical cover for a smoker compared to a non-smoker and you'll see how much of a difference it can make.
So, it stands to reason that improving your habits – in this case quitting smoking – could have a positive impact on future payments. It may not have an instant effect, but if you manage to stay smoke-free for a few years, your payments could notably drop. Find out more about life insurance and the kind of things that can affect the price of your cover, or get started with a personalised quote through our preferred partners to see what your payments could be.
* Family Building Society's Premium Saver (3) pays a market-leading variable rate of 1.51% yearly, though it requires a hefty minimum deposit of £15,000 and only allows additions until 29 March 2019, which means it isn't really suitable for the purpose of this discussion.