Savings are simply money that you have saved. You can save money in a variety of ways – including in bank accounts, in a piggy bank, or in stamps or store savings schemes.
Savings in banks
Many bank and building society accounts reward you for saving money with them by adding ‘interest’ on to the amount. Depending on your account, this can range from 0.25% (25p per £100) to 6% (£6 per £100). These amounts change depending on the economy and whether banks are trying to attract you to save with them.
You can save in a current or basic bank account, or there are special savings accounts, or accounts called ‘ISAs’ (Individual Savings Accounts). Interest rates for ISAs are usually higher than savings accounts at banks or building societies, and there is no tax charged on the money earned in interest. There are limits on the amounts someone can put in to these accounts each year. Some may also have limits on withdrawals, or you may have to submit notice to withdraw money.
Savings in credit unions
You will also earn interest on credit union savings accounts. The great thing about saving in credit union accounts is that you often become eligible to borrow from the credit union too. Savings accounts with credit unions are usually free.
Stamps, shops, or catalogues
You can also save in stamp or catalogue schemes – these are popular with saving for Christmas. Supermarkets run stamps schemes where you can buy stamps and save them on a card, and then claim back the value of the card – so over 50 weeks, if you bought £2 of stamps a week, you could claim back £100. Some supermarkets offer bonuses, so you may get a couple of pounds extra when you claim the money back – much like interest on a savings account.
These tend to be quite secure if they are a major supermarket, like Tesco or Asda. You just have to make sure you don’t lose your card, and be aware that you may not be able to claim your money back until a certain time.
Catalogue and hamper schemes are similar – you save a few pounds a week with the catalogue company and then you have a lump sum to spend in the catalogue or to buy a hamper with. The drawback with these schemes is that often the goods in the catalogues are more expensive than you might find on the high street, so sometimes by saving a different way you may end up getting more for your money. Do also bear in mind how secure the scheme is – a few years ago one catalogue and ‘savings club’ company collapsed and about 150,000 people lost lots of money just before Christmas.
Other ways of saving
You can also save with a good old savings jar or piggy bank – this might be a very easy option, but do make sure that you keep it in a secure place.