MARTIN Lewis has urged people on Universal Credit to take advantage of a lesser-known program that gives you a 50% bonus on their savings.
The Money saving expert The founder tweeted about the “unbeatable” program which can help people on benefits get a little extra cash.
What is the Savings Assistance Program?
We’ve already told you how the Help To Save program creates an account for low-wage workers on Universal Credit or other benefits.
It helps you save money and provides an extra boost as an incentive to save money.
To apply for the program you must be a UK resident and meet one of the following criteria:
- Receive Universal Credit and have an employment income of £658.64 or more for the last monthly assessment period
- Benefit from the work tax credit
- Right to work tax credit and child tax credit
Each month you can save between £1 and £50, depending on how much you have.
Savers will receive a 50% bonus on all the money they have saved after two years, and another after four years.
This means that for every £1 you hide, you’ll get a 50p bonus, up to a maximum of £1,200 over four years.
To get the maximum bonus, you need to save £2,400 over four years, or an average of £600 per year.
Savers won’t be penalized for dipping into their pool either – you’ll still get the bonus if you need to cash out.
The 50% is awarded on the highest balance you’ve managed to achieve over two years – not on the amount left in the pot after the two years are up.
After that, you decide whether you want to continue saving for another two years or not.
If you keep saving, after another two years you will get another bonus.
The second bonus will be based on the difference between the highest balance in years three and four and the highest balance you achieved in the first two years.
So, for example, if you have saved £500 in the first two years, you will get a first bonus of £250.
If you then save up to £800, you will not get a 50% bonus on the lot, which would be £400.
Instead, you’ll get 50% on the difference between £800 and £500, or £300. This means your second bonus would be £150.
The account is easily accessible, so if you need to withdraw money, you can do so.
Bonuses will be paid directly into your main bank account, not the program account.
What else should I know?
Every month you can save up to £50.
Indeed, the maximum bonus you can get in four years is £1,200.
If you save £50 each month for this period, you would have saved £2,400 in total.
This is to help you not outgrow your savings and lose some of the perks you earn.
If you go over the £6,000 savings limit then they might decide to cut some benefits and the scheme will then not act in your favour.
What do the experts think?
There are already people who have tried and tested the program and also thanked Martin on Twitter.
One person said: “@MartinSLewis thank you very much for your information regarding ‘account saving help’ from the government. I claimed UC for my wife and I and followed your advice to open an account in June 2020 , £50 each [per month] give us a free bonus of £1,200 next week plus our savings of £2,400, great advice.”
Be aware that you cannot open a joint account for the scheme – it is just for individuals.
Martin Lewis does not recommend the scheme for those with large debts. Instead, these people should prioritize settling their debt before looking into the Help To Save account.
He said: “The big concern with Help to Save was that it would encourage people to save when they would instead have to pay off their debts, including some hugely expensive ones like payday loans.
“Yet they managed to put in place a structure that allows people to have the best of both worlds.”
Martin praised the fact that the bonus is based on the highest amount you’ve saved, rather than how much you actually have in there.
This means you can use your savings in an emergency without being penalized, instead of having to borrow money.
He added: “It’s a very smart ploy and one that will work for many people. Of course, if you have extremely expensive debts, rather than saving up, it’s better to try to clear them first.”
We asked another savings expert about the scheme, Myron Jacobs.
Myron agreed that’s a good incentive, but you should always think about what’s more important – saving money or paying debts like council tax?
The savings expert said: “This is a great initiative to help instill a culture of savings in the country’s most cash-strapped people. But for those who have felt the brunt of the cost crisis of life, the priority has been to stay above the bread line.
“Keeping money stashed away in a savings account for a proverbial rainy day is good practice and for those who can afford it, a 50% savings bonus is too good a carrot to pass up.
“However, low-income people should consider whether saving is a priority if it means they would have difficulty meeting their debt commitments, especially priority debts such as council tax, as a result. “
Another expert, Sarah Coles, also gave us her comment on the diet.
She agreed that it’s a good diet for those who can afford it, but even those who do need to be careful that it doesn’t take away some benefits because they go over a limit.
Sarah said: “This is a really generous scheme, offering a 50p bonus for every pound you save, so if you qualify it’s worth thinking carefully if there’s a way to allow you to put money aside.
“There aren’t a huge number of hurdles to jump through – so you can start from just £1 a month and get your hands on cash anytime you need the cash, and because the bonus is based on the biggest balance ever, you are not penalized if you withdraw money.
“Unfortunately for anyone on Universal Credit, money is incredibly tight at the moment. Even before prices started to rise, the withdrawal of the £20-a-week coronavirus payment in October made it harder to join the two ends.
“Now that prices are skyrocketing, life has gotten even tougher – with prices up 9% year on year and annual benefits increasing by just 3.1%. Generous savings exist, but if you don’t have money to save for it, it doesn’t help you at all.
“If you already have savings, it’s also worth bearing in mind that if your Help To Save money pushed you over £6,000 in personal savings, it could affect your eligibility for certain benefits.”
If you are having difficulty with the technology you can also call 0300 322 7093 and HMRC advisers will guide you and help you set up your account.
The program runs until September 2023.
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