Savers pay £2m into new Help to Save scheme in one month
A new savings scheme, which gives a bonus of up to a £1,200 to people on low incomes, has attracted £2 million of deposits and 20,000 new savers in just one month, according to figures seen by MoneySavingExpert.com.
The Government's Help to Save scheme officially launched on 12 September after an eight-month trial period.
During the trial, £3 million was deposited by 45,000 savers, but since its official launch an additional 20,000 have joined the scheme, and the total amount deposited has reached £5 million.
The Government's Help to Save initiative, which is available to working people on tax credits and universal credit, rewards savers with an extra 50p for every £1 saved. Around 3.5 million people currently meet the eligibility criteria.
It is a new type of savings account specially designed for low-paid workers. You can save between £1 and £50 every month, and at the end of two and four years, you're paid a 50% bonus, up to a maximum £1,200.
For full help on getting the best savings rates, see our Savings section – our Top Savings Account guide lists all our current top pick easy-access and fixed-rate savings accounts.
How does Help to Save work?
On the face of it, it's pretty simple. You can save between £1 and £50 each month for two years into the Help to Save account, though you don't have to save every month. It's not locked away, so you can make withdrawals if you need to.
At the end of the two years, you'll get the first 50% bonus. You can then choose to stop saving and withdraw the cash, or keep the account for another two years, again saving up to £50 every month, and potentially get another bonus paid at the end of the four years.
There are a couple of boons with the bonus, though:
- The bonus for the first two years is paid on the highest amount you had in the account during the two years, before any withdrawals.
For example, if you managed to save £1,000 but withdrew £200 of it just before the two years were up, despite having a balance of £800 you'd still get a £500 bonus, as that's 50% of your highest balance, which was £1,000.
- The final bonus after four years is worked out by deducting your highest balance from the first two years from your highest balance in the final two years.
For example, if your highest balance was £1,000 in the first two years you'll get an initial bonus of £500. If you keep your account open for a further two years, and in this time your highest balance is £1,500, you'll get another £250 bonus.
MoneySavingExpert.com founder Martin Lewis praised the scheme as "very clever" when full details were released in September.
For full details, and to see if you're eligible, see our Help to Save for those on low incomes gives up to £1,200 bonus MSE News story from last month.
What does the Government say?
HMRC head of customer services Angela MacDonald: "It's great that so many have already signed up for Help to Save and we hope to see even more applications from those eligible."
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