Phase of contributions to savings accounts

With recent legislation it’s even more important to have cash stowed away for surprises.

14:41 19 April 2013

If you thought that the necessity for establishing a savings account was rubbish, this would be a good time to reconsider that view. Most of us have some form of debt, and for those who lacked a savings accountor happened upon a bit of bad luck, the future may take a turn for the worse with fairly recent legislation.

 

Previously if people owed amounts of £25,000, the sale of a property could be forced so that creditors could recoup their losses. Aggressive changes in that policy now place the limit at just £1,000 in outstanding debt.

 

If we are honest, there are probably many of us who are one catastrophe away from being unable to pay that amount. An unexpected collision, emergency medical treatment, or broken boiler could be the beginning of the end for many homeowners.

 

It is imperative, now more than ever, that we try to find extra room in our budgets to deposit each month into some form of savings account. There are a variety of accounts from which to choose so it’s important to shop around to different financial institutions for the best interest rates and lowest fees.

 

Consider some of the following savings account options:

 

• Cash Individual Savings Account (ISA)—reliable return on your investment with these, though the interest rate will be small. You won’t make much additional money, but the amount that you do have will be guaranteed to come back to you. There is an annual limit to how many funds you can deposit.

 

• Stocks and Shares ISAs—accounts like this typically are able to produce a higher rate of return than just a Cash ISA in a shorter amount of time. These also have an annual contribution limit.

 

• Regular savings accounts—lower interest rates for this savings account, but the good news is that there is no annual contribution limitation.