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January Savings Round Up

The start of a new decade will inevitably see many of us committing to New Year’s resolutions as we enter 2020. Unsurprisingly, the vast majority of surveys on people’s resolutions have very similar feels to them in terms of our favourite ones. The top five are almost always dominated by plans to lose weight, improve fitness, get a new job, save more and learn a new skill or hobby. Typically, between 30 – 40% of people resolve to save more during the year.

What’s disappointing to know is that, according to research from U.S. News & World Report, the failure rate for our resolutions is around 80% with most losing their resolve by mid-February. Given that four in ten Brits also have less than £100 in savings, according to the Money Advice Service, this month’s column will focus on a number of tips and ideas on how to improve your savings in 2020 and give you the best chance of achieving your savings resolutions.

Here’s my top tips and savings challenges to help you save more in 2020:

1) The 1p savings challenge

This is a really popular, cheap and simple way to save money through the year. It starts by saving 1p on 1st January, 2p on 2 nd January, 3p on the third and so forth. Each day you save a penny more than the previous day. As 2020 is a leap year, this will mean putting away £3.66 on 31st December giving you £671.61 at the end of the year.

You can increase this amount by earning interest on it. Ford Money and Marcus both offer easy access savings account with a £1 minimum balance and pay a very competitive 1.35%. Savers opening one of these accounts and starting the challenge from 1st January will have the minimum balance on 14th January.

This is a really popular challenge as it costs very little in January, when people tend to have the least money spare to put away. It also means doing something every day so helps to reinforce the savings habit.

2) The 52 week challenge

This is a weekly savings commitment which means either putting away a fixed amount each week or starting with a small amount and increasing this each week.

A fixed amount challenge could be £1, £5, £10 or any amount that works for you. Those saving £1 a week will have £52 at the end of the year with £5 savers having £260 and £10 providing a pot of £520 at the end of the year.

The beauty of this challenge is that it is easy to automate – savers can simply set up a regular payment to move the sum they decide on into their savings account each week.

Those wanting to start small and increase their savings could go for £1 in the first week and increase this by £1 every week during the year, putting away £52 for the final week of 2020. This will yield £1,378 at the end of the year!

3) Regular savings

My favourite savings account is a regular saver. I’m a huge fan for two reasons. Firstly, they pay the best rates on the market of any account - our current best buys have an interest rate of 3% which beats the best 5 Year Fixed term bond by miles (2.38% from UBL). Secondly, saving successfully is a habit and these accounts are a great way to start and stick to saving as they set up a regular commitment.

Typically, regular savings accounts allow you to save between £10 and £500 per month for the year. My recommendation is to sign up make the payment on a date that you get paid. That way, the money comes out of your current account when you have your highest balance and you are less likely to notice it has gone and it stops it being spent.

Essex based Saffron Building Society pays 3% on its regular saver and allows between £10 and £250 a month to be saved in it. The account can be opened by post or in branch. Kent Reliance also pays 3% on their regular saver offered in their branches.

Current account customers of HSBC, M&S and first direct can save online with their regular saver which pays 2.75%. Coventry Building Society pays 2.50% on their regular saver which can be opened by non-customers online and phone as well as in branch and by post.

4) Switch current account if you are not happy with your provider

It can be a challenge to save at times. However, almost all of us have money in our current account at some stage of the month. Nationwide pays its customers 5% on the first £2,500 held in a current account with them for 12 months. This is a great chance to earn money by doing nothing – someone who holds an average balance of £1,250 per month will get around £62.50 in interest.

Banks will also pay you to switch to them. First Direct pays £100 for switching and wins almost all banking customer service awards. It also gives a free £250 overdraft and has a 2.75% paying regular savings account. Switchers to HSBC’s Advance account get £175 up front but need to pay in £1,750 each month which is the equivalent of an annual salary of £25,700.

With the government introduced Current Account Switching Guarantee ( www.currentaccountswitch.co.uk ), your new bank takes care of closing your old account, moving your balance and switching all your payments so you don’t have to worry about transferring all your bills. You even pick your own switch date! Over 4 million have switched so far.

Finally, I wish all savers a Happy and Prosperous New Year and the best of luck with their savings resolutions for 2020. Have a great January everyone.

What are the best rates currently?

As we have witnessed in the past couple of months, the savings market can change extremely quickly. We always recommend that you check our website for the latest rates. At time of print, our best personal savings rates are:

Term 

Interest Rate

 Provider

Instant Savings

1.41%

Shawbrook

Notice

1.80%

Investec

1 Year

1.80%

Bank of London & Middle East

18 Months

1.85%

Bank of London & Middle East

2 Year

1.95%

Bank of London & Middle East

3 Year

2.10%

Secure Trust Bank

4 Year

2.10%

Secure Trust Bank

5 Year

2.38%

UBL

About The Savings Guru

We help savers get the best deal for their money by providing unique insight in to the savings market.  We help prospective banks apply for a banking licence and we help build customer services, products and marketing for them.  We also work with existing banks and building societies to improve their savings propositions.  This  insider view of savings means we are uniquely placed to help savers.

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