MILLIONS on Universal Credit could earn £300 free cash in 2025 through an “unbeatable” bank account.
Help to Save is a savings account that gives you a 50% bonus on any money you’ve stashed away.
Anyone on Working Tax Credits and those on Universal Credit earning over a certain limit can open one.
You put in between £1 and £50 each calendar month and save into one for up to four years.
You receive your bonus at the end of the second and fourth years, with the maximum bonus worth £1,200.
Put away the maximum £50 per month in 2025 and you could earn £300 over the year – 50% of £600.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “This is a brilliant scheme, with government bonuses that are so generous that the returns can’t be beaten by any other savings product.
“It’s also super flexible, so it can fit in around your needs, which makes it ideal for people on low incomes.”
According to the government, around 517,000 Help to Save accounts have been opened since 2018, when it was launched.
MoneySavingExpert.com founder Martin Lewis has branded the account “unbeatable” too.
But David Cameron, who launched the scheme as Prime Minister, said up to 3.5million people could be eligible for Help to Save, meaning millions are missing out.
Help to Save is a type of savings account available to those on Tax Credits and Universal Credit.
It is a government-backed scheme which means your money is protected and you won’t lose any put in.
Currently, you can only open a Help to Save account if you are on Universal Credit and you, or you and your partner, had take home pay of £793.17 or more in your last monthly assessment period.
However, from April, the savings account will be open to anyone on Universal Credit who earns at least £1 in their last monthly assessment period.
One thing to bear in mind is that if your Help to Save cash pushes you over £6,000 in personal savings, it can affect your eligibility for some benefits and may see Universal Credit payments reduced.
One major perk to Help to Save is that you can start adding into it from just £1 a month.
Another is that you can dip into your savings at any point in case of an emergency.
There are some drawbacks though.
One is that if you are on Universal Credit you need to have earned £793.17 or more in your last monthly assessment period. This will change from April.
Another is that you only receive the bonus at the end of the second and fourth years.
The government is proposing to cut this to every six months as part of a consultation.
It means savers will be able to access bonuses more regularly.
The consultation will close in January after which the government will announce whether any proposals will go forward and the launch date of any changes.
This does not apply to those on Working Tax Credits who have opened an account.
If you’re not on Universal Credit or Tax Credits, or you are on Universal Credit and don’t meet the current earnings threshold to qualify for a Help to Save account, you do have some other options.
It’s worth starting with an easy access savings account, with the best rates tending to be with digital banks and building societies.
Easy access savings accounts are a good start off point and some let you withdraw money whenever you want without penalising you.
However, bear in mind that some do have withdrawal limits which if you breach you can see the interest rate charged fall.
At the time of writing, you could get 5% on savings up to £3,000 with Cahoot, and could open an account with just £1.
Atom Bank was also offering a 4.85% rate with interest paid monthly and no minimum pay in.
However, the rate dropped to 3.25% each month you make a withdrawal.
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