How can I start saving if I don’t have any savings?
Many people have had no pay rise, or below inflation salary increases, since the financial crisis. With the cost of goods and services rising, many would be savers would love to be in the position of having spare cash to put away every month but simply don’t have any money left over at the end of the month.
There are plenty of financial advice sites and blogs that will tell you to give up that expensive gym membership, take a packed lunch to work and stop buying coffees and you’ll have loads of spare cash. I certainly advocate reviewing the standing orders and direct debits that come out of your account to make sure you are still using them. It is often enlightening also to analyse what you actually spend, rather than what you think you spend, on entertainment, clothes and eating out.
However, we don’t all have the time for this and for many that coffee out with a friend is a pleasure, that gym membership is good for their health and the thought of packing lunch to work as well as everything else that needs to be done in the morning is too much!
Fortunately, there is another way!
In September 2013, a new service called the Current Account Switching Service (CASS) -
www.currentaccountswitch.co.uk/ - came in to being. The reason for this was that in the UK we are statistically more likely to get divorced than we are to move our bank account. The government looked in to why this was and, for many, it was the fear of something going wrong or a payment being missed. CASS was introduced to stop this by putting the banks in charge of the process of switching everything for you, rather than the individual having to change payments or set up new direct debits and standing orders.
Now, it is possible to move bank accounts in as little as seven days. You simply apply for your new account, ask your new bank to move your old account using CASS and tell them which date you want to switch on and the rest is done for you! You will get any new cards, and internet banking log ins ahead of your switch and your balance will be transferred on the agreed date with all your payments set up.
What’s the catch?
There isn’t one – it is even guaranteed that, in the unlikely event that something goes wrong, that any charges or interest incurred will be refunded to you.
All the major bank account providers are covered and almost all the market participates and over 3 million people have successfully switched bank accounts using the service.
Why is this relevant if I have no savings?
The introduction of CASS means banks are competing harder for switching customers and there are some great incentives on offer – both to switch and by way of perks in the new account. Up to £250 is payable - just for switching! This is money that you could use to kick start your savings. Here’s our run down of some of the best offers in the market.
Clydesdale / Yorkshire Bank
The best financial offer to switch comes from the B account offered by Clydesdale and Yorkshire banks. £250 is credited to your account within 70 days of your switch. You do need to meet criteria for the account such as having £1,000 paid in per month (typically for most people this will be done by having their salary paid in) and log on to your new account via the mobile app or online banking.
The account pays 0.25% interest and comes with an instant savings account paying 0.50%. There are better rates on the market (the current best buy on www.thesavings.guru pays 1.30%) but for those who want to keep their savings in the same bank as their current account, it does at least pay some interest.
Further information and applications can be found at: www.youandb.co.uk
Those switching to the Reward Current Account will see £125 credited to their account within three days of the completed switch and will also be paid £3 a month just for being a customer. Put these in to a savings account and you will have £161 at the end of your first year plus interest.
A minimum of £750 must be paid in each month so this may be more attractive for switchers on lower salaries.
Further information and applications can be found at: www.halifax.co.uk/bankaccounts/current-accounts/reward-current-account/
Switching to HSBC’s Advance Bank Account or Premier Banking Account will be rewarded with £150 for switching and another £50 if you are still using the account and meeting the criteria at the end of 12 months. The main ones are paying in £1,750 a month, having two direct debits and registering for mobile and/or online banking. The account also entitles you to open a regular saver which pays 5% on contributions from £25 – £300 per month for 12 months.
Further information and applications can be found at: www.hsbc.co.uk/1/2/current-accounts/hsbc-advance
First Direct is an internet and telephone bank that prides itself in its customer service and phones are answered by a person, not a machine to direct you. They win pretty much every banking customer service award going but are also owned by HSBC so customers can use their branch network as well. They currently offer £100 to switch to their 1st Account and £100 if you are not happy and leave after six months but before a year has passed. You must pay in £1,000 in the first 3 months to qualify.
They too offer a linked 5% regular savings account, like HSBC, and offer some of the cheapest loan rates in the market plus an overdraft of £500 with the first £250 of that being free.
Further information and applications can be found at: www1.firstdirect.com/1/2/banking/current-account
Although Nationwide do not offer an incentive for switching, they do pay 5% interest on their Flex Direct account on balances up to £2,500 for the first 12 months for customers who pay in at least £1,000 a month.
For those who have their salary paid in to their account and then pay out gradually over the month, this may prove attractive. For example, if you have £2,500 paid in at the start of the month and gradually use that over the course of the month, you may average a balance of around £1,000 over the course of the month which could earn you £50 or so of interest throughout the year.
Further information and applications can be found at: www.nationwide.co.uk/products/current-accounts/flexdirect/features-and-benefits
Some of the links on this page are quite long and you may not want to type them in. You can access this article on our website at www.thesavings.guru and click through direct to the websites mentioned.
Last month’s winner was Adrian Plummer from Billericay who won a £50 to spend at Giggling Squid – one of our favourites too! Unfortunately, we couldn’t get a picture before print deadlines but it will be on our website by the time you read this!
For a chance to win a £50 restaurant voucher this month, send your answers to the following questions by Wednesday 22nd November:
- Which journalist interviewed us about Pensioner Bonds on 23rd October?
- Which client of Savings Guru is also part of a world-famous department store?