Savings Q&A: your 3 biggest savings concerns

Des McDaid, Head of Savings at TSB and John Fitzsimons, LoveMoney, took your questions on twitter recently in a Q&A hosted by LoveMoney. We've boiled their responses to your concerns around savings into the 3 questions which were most important to you.

What should I be looking for in a good savings deal?

John: "You get a better interest rate if you lock your money away, but that means you can't use it. A good rule of thumb is to only lock away money that you can do without. Keep the rest in easy access."

Des: "An instant access ISA will normally be everyone's first savings account because the interest is tax free. From April this gets more complicated as interest on ALL savings accounts will only be tax free for the first £1000 of interest earned for basic rate tax payers. An ISA will still make sense as your money stays tax free if rates start to rise or the tax policy changes…look for fixed rate savings accounts that let you lock your money up for different periods including one to two years or even longer."

Did you know… that ISA stands for Individual Savings Account and that the amount you can save tax free in an ISA changes every financial year.

What can I do to save money day to day, or a little at a time to put towards big purchases?

John: "Don't go [food shopping] when you're hungry! Shop online, [you're] less likely to be tempted by 'deals'."

John: "If you are flying [for your holiday], book early. Also see if you can convert loyalty points into Avios if flying with British Airways. Shop around for the best currency deal too. NEVER change your money up at the airport! You'll get an awful rate."

Des: "Look out for the Government's Help to Buy ISAs[available] in December 2015. You can save up to £1,200 in the first month and then £200 a month after that. If you build up a pot of £12,000, the Government will give you a bonus of £3,000 towards your deposit [for your first home]."

Did you know… that taking money out of your ISA account doesn't reset your tax-free ISA allowance. If you save up to your entire ISA allowance then withdraw some money, you can't put anything else back into your ISA in that tax year. This is true even if you've saved less than your upper limit in your ISA.

What should be my biggest focus? Pension or other savings?

Des: "It's best to have a balance of long and short terms savings. Make sure to have sufficient savings for emergencies then you can focus on the longer term. It's a good idea to supplement your State Pension, and it's never too early to start paying in. The Government has made good changes, check with your employer to see what they offer."

Now you know… that there's more to saving than getting a savings account. We feature lots of savings tips on Straightforward Money, our blog, from how to get rewarded when paying for things to cutting household bills and how to make the most of your savings, once you've got them. Why not subscribe to our RSS feed to see these more regularly.

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