6 top tips for saving

A guide to savings by Furness Building Society

What is a savings account?

It’s a secure place to put your money and earn interest on it. So you basically get back more than you put in. So how is a savings account different from a bank account? Well while some bank and building society accounts pay interest, they also offer other services like enabling you to pay bills through direct debits and having use of a debit card. 

 

However, there are lots of types of savings accounts so selecting the right one for you isn’t always straightforward. Without knowing the difference between the different types of account, the variety can feel confusing. So if you’re thinking of opening one, it makes sense to get clued up about what each one does and any particular benefits it has that will make it the right account for you. 

 

To help you do that, we’ve pulled together six top tips to consider when choosing a savings account. If you have money to save and you’re looking for the best place to put it, give this little guide a read and it may help point you in the right direction. 

Tip 1: Pay off any debts first.

Before you even consider stashing your cash somewhere, make sure you’re debt free. It will usually make the most financial sense to use any extra money to pay off any debts before you start saving. This is even more important if the interest cost on your debt is more than you’d earn through a savings account. 

 

For example:

 

Credit card balance: £500

Interest: 20%

Annual cost: £100

Savings account balance: £500

Interest: 2%

Annual earnings: £10

 

In the case of this scenario, the cost of debt is £100 versus a £10 reward for saving. So assuming you have the same balance throughout the year, you’d be £90 better off repaying the debt. 

Tip 2: Check if you can overpay your mortgage.

Tip 3: Question whether you’ll need access to your money.

Tip 4: Think about how regularly you’ll want to put some money away.

Tip 5: Find out if you’ll pay tax on your savings interest.

Tip 6: Consider a LISA if you’re thinking of buying your first home soon.

Next steps

Do you have any questions?

We understand that everyone has a unique set of circumstances and our team will be able to help guide you through the savings options that are most suitable for you. You may also find our savings account finder helpful. Alternatively, please get in touch by visiting us in branch or giving us a call on 0800 834 312.