Frequently asked questions
We know there are so many aspects to savings that it can get confusing. We’ve put together some useful info to help you find your way around.
Are my savings safe?
Under the Financial Services Compensation Scheme (FSCS), savings up to £85,000 (or £170,000 in a joint account) are protected in the event that the UK regulated bank, building society or credit union goes bust. This limit applies per institution and not per account.
Find out more information here.
Do I have to pay tax on my savings?
Depending how much you earn from sources other than your savings, e.g. from a wage or salary, you might have to pay tax on the interest earned on your savings.
You could also get up to £1,000 in savings interest tax free, with a Personal Savings Allowance.
Find out more information here.
Savings held in an Individual Savings Account (ISA) provide a tax exemption for the interest earned, but there’s a limit on how much you can add to these accounts each year.
How do I avoid scams with my savings?
Take Five, the national campaign offering straight-forward, impartial advice that helps prevent email, phone-based and online fraud offers this advice:
- STOP: Taking a moment to stop and think before parting with your money or information could keep you safe.
- CHALLENGE Could it be fake? It’s ok to reject, refuse or ignore any requests. Only criminals will try to rush or panic you.
- PROTECT: Contact your savings provider immediately if you think you’ve fallen for a scam and report it to Action Fraud.
Find out more at the Take Five website.
I used to have a savings account but where can I find it?
If you recall having a savings account somewhere, but can’t quite remember where, mylostaccount.org.uk is a free service that could help you track it down.
What is jam-jar budgeting?
Jam-jar budgeting is a way of controlling your spending by splitting your money into different pots of expenses. It’s a good way to prioritise what you spend and keep track of where your money is going. Whether you really use jam jars, separate savings accounts or tools in apps and online banking, it can help you to keep control.
What about shares, property and other investments?
When your savings have grown you might want to think about putting your money into shares, property or other investments. Putting your money into some form of investment could give you bigger returns than simply saving. The flipside is your investment could also lose value.
The Financial Conduct Authority’s Investsmart website has some great questions to go through to ensure the investment is right for you.
We also have an article that explores this in more depth.
I have outstanding debts, should I be saving?
If you have outstanding personal loans or other short-term debts, consider paying these off before starting to build your savings, as the interest charges on these types of loans and debts are usually quite high.
Here Stepchange debt charity explain some rules of thumb.
If you are struggling with debt see our Support section as there are organisations that can help.
Is it really worth the hassle to manage my savings?
With around £260bn of household savings in accounts where no interest is paid (source: Bank of England), it’s worth shopping around to find an account that best suits your needs and earns the best available rate of interest to allow your savings to grow more quickly.
There are lots of different types of savings accounts with varying rates depending on the amount you save and how often you want to take money out. Different organisations also offer different rates. See our Savings Account page for more info.
Many savings providers offer a savings review, which can help you find the most appropriate account for your current needs.