Money Saving Expert (MSE) Provides Tips to Choose the Right Savings Account and Save Hundreds of Pounds
Martin Lewis' Money Saving Expert has issued an urgent warning to everyone with a savings account, as a simple mistake could end up costing them £180. In their latest update, the experts at MSE share valuable tips to help people select the right savings account and potentially save hundreds of pounds in the process.
Understanding Different Types of Savings Accounts
One of the major challenges for savers is understanding the different types of savings accounts available in the market. MSE's handy guide focuses on the top-pick "standard" savings accounts, but also highlights other methods to maximize returns. The experts recommend that individuals with debts or a mortgage should prioritize paying off their debts before saving. For example, having £1,000 in savings may earn up to £20 a year, but if you have credit card debt, this debt could cost you £180 a year. Clearing the debt with the savings could make you £160+ better off.
Overpaying Your Mortgage for Huge Financial Gain
Martin Lewis emphasizes that overpaying your mortgage should be a serious consideration if you have the cash to spare. With mortgage overpayments reaching a 20-year high due to increased interest rates, paying off your mortgage faster can boost your finances significantly. Lewis advises that overpaying your mortgage eats into the debt you've accumulated from buying a home, potentially making you mortgage-free sooner. Moreover, the money you'd save on interest often surpasses the returns possible by putting the money in savings. The gains from mortgage overpayments can even amount to tens of thousands of pounds.
Choosing the Right Account for Instant Access or Higher Returns
MSE's guide also recommends that individuals who require instant access to their cash should opt for an easy-access savings account. Although these accounts allow customers to make withdrawals at any time, they typically offer lower interest rates compared to other types of accounts. Keeping an eye out for introductory "bonus" rates can also be beneficial, as they often promise higher interest rates. However, it is crucial to remember the end date for the bonus and switch accounts as soon as it ends to avoid being stuck on a low rate.
Martin Lewis also suggests three additional options for higher payers that still provide some access to cash if needed. Firstly, a fixed cash ISA allows emergency access to cash and is suitable for those unlikely to touch the money but want insurance in case they need to. Secondly, a notice account is suitable for individuals who know or will know when they need to withdraw money, such as those saving for a home. Finally, short-term fixes are ideal for those who know exactly when they will need the cash, as they have the option to lock the money away for six or nine months.
This warning follows Martin Lewis' recent alert to individuals who opened a Cash ISA more than six months ago, as they may be losing out on potential savings. He has also encouraged people to avoid making the same financial mistakes with their credit cards, which could end up costing them thousands of pounds.
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