Universal Credit claimants can benefit from a Help to Save account, which allows eligible savers to get a 50p bonus from the Government for every £1 they put away over four years. To qualify for the account, savers must be claiming Universal Credit and have earned £604.56 or more from paid work in their last monthly assessment period.
The Help to Save account will allow savers to pay up to £50 each month into the account, which equates to £2,400 over four years.
Over the course of four years, bonuses will be awarded to holders, with the most they can earn from their savings being £1,200 in bonus money.
Today, HMRC released official statistics on how many Help to Save accounts have been opened over the last six months.
Between August 2020 to January 2021, 42,050 Help to Save accounts were opened.
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The total number of accounts opened now stands at 264,800, a 19 percent increase on the total number of accounts opened by the end of July 2020.
In total, 216,950 individuals have now made a deposit to their Help to Save account, a 21 percent increase compared to the previous release, but there are 47,850 accounts yet to receive a single deposit.
On these figures, Myron Jobson, a Personal Finance Campaigner at interactive investor, noted coronavirus appears to have had an impact on motivation: “The coronavirus crisis has clearly helped increase the uptake of Help to Save towards numbers the Government would have hoped for when it first launched the scheme back in 2018.
“According to official figures, the number of people on Universal Credit rose by 98 percent since 12 March to six million as of 14 January 2020 – many of whom will be eligible for the Help to Save scheme.
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“It is a great initiative to help instil a culture of savings among the nation’s most cash-strapped individuals. But for those who’ve felt the full force of Covid’s financial pinch, the priority has been to stay above the breadline.
“For those who can afford it, a 50 percent savings bonus is too good a carrot to pass up at a time when many conventional savings accounts offer a pittance in interest.
“Those on a low income should consider whether saving is a priority if it would mean they would have difficulty meeting outstanding debt commitments, particularly priority debts such as council tax, as a result.
“However, the latest Help to Save uptake figures suggest that the value of having something to fall back is not lost on the nation’s most vulnerable.”
Holly Mackay, the CEO at Boring Money, was somewhat surprised by the figures, noting: ““It seems counter-intuitive that a scheme like Help to Save could actually experience a bounce during the pandemic.”
Holly continued by examining the welcome long-term habits the Help to Save scheme could be creating: “A growing number of people on Universal Credit meant that a larger pool of people were eligible to apply to open an account.
“And for those that already had an account in place and enjoyed a stable income in 2020, this was actually a good time to set money aside for the future.
“Like so many things during the pandemic, the savings story has been a tale of two halves.
“On the one hand, many households experienced an extremely rough 2020 and struggled to make ends meet.
“Meanwhile, others actually saw their bank balance swell as lockdown led to an enforced spending cut and those in stable jobs spent less on commuting. This resulted in a massive surge in household savings, and today’s figures show many of those that had an open Help to Save account took this opportunity to set money aside in the government scheme.
“Help to Save could be a springboard to long-term saving, although the latest figures show the average amount deposited in each account is around £470, so they represent pretty modest savings pots at the moment.
“But around 80 percent of account holders have started making contributions, and 91 percent of those monthly savings are at the maximum £50 per month permitted, so there is evidence of a regular savings habit emerging.”
To apply for a Help to Save account, claimants will need to head to the Government’s website and have their Government Gateway user ID and password at the ready.
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