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Maximising savings

At Debt Advice we speak to 100's of people every day who are struggling with their finances and debts. If you are lucky to have savings you want to know how to get the most from them.

Maximising your savings

See our helpful hints and tips below on how to manage your monthly savings. There are many ways to reducing your expenditure.

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Cash ISA's

If you are fortunate enough to be able to save it is important to try and maximise your savings in the best way possible. Cash ISA's are perfect for saving your money. They are similar to a savings account only there is no tax on the savings interest. This is great as you can save over one fifth on your savings interest. Other than the free interest tax, there isn't much difference in the amount you can pay into a cash ISA. There is however a limited maximum allowance that you can save in any tax year. As of 6 April 2015 you can save up to £15,240 annually in a cash or stocks and shares ISA and £4,080 in a junior ISA. Like any savings account a cash ISA is flexible. The only stipulation being that if you withdraw money from the ISA you cannot replace the savings if you have met the maximum allowance for that tax year.

Paying off debt with your savings

If you have debts which charge interest of any sort and you have savings, you will benefit from using the savings to pay off the debts. The very thought of this sounds heartbreaking, but if you think about it, you will actually be saving money in the long term!

eg. If you have debts on a 18% apr credit card of £1000, your interest for the year would be £180. If you saved £1000 in a savings account at 4% annually after tax, the interest your would earn would be £40... This leaves a difference of £160. If you used the £1000 in the savings account to pay off the debt, this would be the amount that you would save within the year. The thought of using your hard earned savings to just disappear on a credit card is understandably heartbreaking, but when you really think about it, it makes logical sense.

If you are struggling with your debts, or simply want to talk to someone about your problem, contact us at Debt Advice. Call our helpline on freephone 0800 043 5133 and speak to an advisor.

 

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