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How to save

There’s plenty of evidence to suggest that however much personal debt Brits are currently racking up (and as much as the papers can seem a bit hysterical about spiraling debt there is undoubtedly a problem) the debt issue is, to some extent balanced out by the fact that Britons are also saving more money than ever before.

If you feel like you’ve got enough spare money saving really is worthwhile – having a bit extra stashed away is bound to come in handy and the security of knowing that whatever happens you’ve got extra funds to fall back on shouldn’t be underestimated. There’s a multitude of ways to go about saving, different products will suit different people; to help you decide on the best choice for you we’ve come up with a simple overview of a few of the most popular savings and investment options:

ISA

An ISA is essentially a tax free savings account and with the end of the tax year approaching now could be a good time to get one. We all have a total annual ISA allowance of £7,000 including a cash savings limit of £3,000 (going up to £7,200 and £3,600 in April) so if you haven’t already got one and like the idea of tax free savings (who wouldn’t) seizing the moment and taking advantage of this years allowance makes a lot of sense.

At the moment you can get either a Maxi or two Mini ISAs; if you’re interested in straightforward cash savings account then a Mini ISA is probably the way forward. Again, there’s a limit of £3,000 but its well worth taking advantage of and should you want to invest more why not get a Cash Mini ISA now and a further one in April, giving you the potential for £6,600 in cash free savings.

 Given that there are some extremely competitive deals out there (A&L Direct ISA offers 6.25% gross p.a. variable compared to 6.50% from their eSAver savings account, the ISA of course won’t be taxed, making it a better overall savings prospect) these are undoubtedly some of the best savings opportunities available.

Savings Accounts

Savings accounts are probably the most straightforward means of saving and should offer the most user friendly, flexible savings opportunity. Because the interest you earn on a savings account will be taxed the gross AER is unlikely to match up to that of a good Cash ISA but a savings account does offer a much higher maximum investment and, in many cases, instant access to your money. Do be aware however that some banks will apply an interest penalty when you make a withdrawal, denying you any interest for that month for instance – A&L savings accounts for instance offer very good rates provided you don’t make a withdrawal. It’s also worth baring in mind that interest rates can fluctuate depending on what’s happening in the wider economy