Over 3million on benefits and Universal Credit missing out on £1,200 Help to Save scheme
AROUND 3.4million people on benefits - including those on Universal Credit - could be missing out on £1,200 from the government's Help to Save scheme.
Just 132,000 of the 3.5million people eligible for the savings perk are using the account, according to new figures released today.
And 32,000 people who have set-up the account are yet to start saving any cash in it.
Under Help to Save, you get 50p for every £1 you save up to a maximum bonus of £1,200 over four years.
That means you'd need to save £2,400 to get the biggest boost to your savings.
Economic secretary to the Treasury, John Glen, said: “Saving shouldn’t be seen as a luxury but as an essential part of planning for the future.
What are the different accounts for savers
WE take a look at the best-paying accounts on the market which will give you the most bang for your buck
- Fixed rate accounts: Fixed-rate accounts will typically offer better rates than normal, easy access accounts, so if you know you can afford to tie your money up for between one and five years, it'll be worth looking at these type of accounts.
With these accounts you'll always need to check how much you need to open the account with - some have really high limits which won't be available to most people. - Current account savings: Rates are much lower on these accounts than in previous years. Yet you can still beat the easy-access rates above on small amounts, and some even offer security of rate. The advatange is once the account's opened, these are locked in, regardless of base rate cuts or banks lowering rates.
- Isa accounts: An Isa (Individual Saving Account) is a tax-free way to save or invest. So, if you're starting to think about saving or investing, it could be a good place to begin. Here's our guide to the best Cash Isa accounts in 2019.
- Easy-access savings accounts: So-called easy-access accounts are meant to be the most straightforward way of putting cash aside for a rainy day. But often the eye-catching top rates are only valid for a limited period of time, after which they drop. If you want to make the most of the bonus offer, you need to make sure you set a reminder to move your cash to avoid being caught out by this "teaser rate". Alternatively, you can also go for an easy-access account that promises longer-term returns. Here's our round-up of the best easy-access accounts.
“So if you’re eligible but haven’t yet opened an account, you should take a look. Even a small amount could help you to be more prepared for the future.”
But some experts say a lack of publicity around the scheme, which finally launched in September 2018, means not not enough savers know it exists.
Laura Suter, personal finance analyst at investment platform AJ Bell, said: “The Help to Save scheme was championed by the government as a way to help low-paid people to put money away, but it’s suffered from a lack of publicity and government backing.
"Then chancellor George Osborne hailed it as a way to improve the lives of the poorest in society, but subsequent delays to its launch and changing governments mean it has been forgotten."
Can I get a Help to Save account?
The account is only available to those on tax credits or to Universal Credit claimants who are earning at least the equivalent of 16 hours a week (£569.22 a month) at the national living wage.
You can save between £1 and £50 every calendar month and accounts last for four years from the date opened.
After two years, savers get a 50 per cent tax-free bonus on the highest balance they’ve achieved and if they continue saving they could get another 50 per cent tax-free bonus after a further two years.
This is a much higher effective rate of interest then you'd earn with a regular savings account or bank account.
The top interest paying current account, for example, pays 5 per cent, while the top easy-access savings account pays 1.5 per cent, and the top Cash Isa pays 1.46 per cent.
So that's a respective £120, £36, or £35.04 boost on the equivalent £2,400 maximum pot.
Savers can withdraw cash from the Help to Sav penalty free although this may impact the bonus you earn on your savings.
How to apply for Help to Save
You can apply for an account via but you need a government gateway user ID and password.
If you do not have a user ID, you can create one when you apply.
Just be aware that you’ll be asked to provide your bank details when you apply as the bonus is paid into your bank account rather than into the savings account.
More on banking
We explain what Universal Credit is, who’s eligible to claim it and how the benefits system has changed.
The Sun is campaigning to Make Universal Credit Work to help working families let down by the shambolic rollout of the new benefits system.
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