Money Insider: Regular saver accounts ideal for those trying to get started

Even small balances can cope with surprise expense and avoid costly credit card route

Whether it’s a rainy day fund, or a nest egg to help pay towards the cost of Christmas or the annual summer holiday, most of us strive to put some money aside.

Despite the low interest rates paid on the majority of bank accounts, saving money on a regular basis is a habit worth adopting and one which will stand you in good stead throughout your life.

Even a balance of a few hundred pounds will help if you are suddenly faced with an unexpected expense and will save you having to rely on costly credit cards.

However, for the majority of people the hardest part of saving is actually getting started.

We may have good intentions of saving some of our wages at the end of the month, but by the time we get there it’s often been spent elsewhere.

One of the best ways to overcome this issue is to set up a standing order so that your money is switched to your savings account the day after you get paid, that way it won’t be sitting around in your current account tempting you to spend it.

A number of banks and building societies offer a regular savings account and, although the interest rates are much better than bog standard savings products – in some cases two or three times higher – the terms and conditions are pretty strict.

Providers are able to offer higher rates on these accounts as they restrict the maximum amount you can deposit – typically between £25 to  £300 per month rather than maximum balances of £1m-plus permitted with other savings products.

Most regular saver accounts don’t allow any withdrawals during the  12- month term of the account and you must also make a payment every month to qualify for the headline interest rate.

Although some may find the restrictive terms and conditions as a little off-putting, for others it helps to instil the financial discipline they need to stick to a regular savings routine.

If you’ve got a current account with First Direct you can get a regular saver account paying 6 per cent AER while HSBC offers the same rate for its Premier, Advance and Passport account holders.

Other deals worth a mention, and where you don’t need to hold a current account with the provider to qualify, include West Bromwich Building Society at 4.1 per cent, while Cheshire Building Society and Kent Reliance both pay 4 per cent AER.

Once you get into the habit and have built a savings pot, it gives you more options – for instance, you could choose to put your lump sum into a fixed-rate bond or an ISA while you take out a new regular saver for the following year.

Don’t fall foul of the insurance small print

Just because you’ve purchased an insurance policy, don’t assume that you’ll automatically be covered if something goes awry.

For example, with your car insurance, make sure you don’t underestimate your annual mileage calculation, because if you claim to be driving 10,000 miles each year yet in reality are driving twice that distance, don’t be surprised if the insurer throws out any claim you may make.

Similarly, when applying for home cover, in many instances you must state whether the locks on your front and rear doors comply with British “safety standard BS3621”. Not surprisingly, as in some cases you’d need to remove the lock out of the door to check, the question is often answered incorrectly. However, it could prove an expensive mistake because, if you suffer a break-in and it is subsequently found that the lock does not match the details on your policy, your insurer may reduce or refuse a pay-out.

Another important tip is to ensure you always report a theft to the police within 24 hours of the incident. Insurers will ask you for a crime number as part of the claim process. Failure to obtain a number could cast doubt on whether a theft has genuinely taken place and could result in a claim being rejected.

It’s not just in car and home insurance that you need to be aware of potential pitfalls which may invalidate a claim. Your travel insurance policy could be void if you suffer an accident after drinking alcohol when on holiday, even if you are not drunk, but try to claim for medical expenses.

The maximum you can drink and be safe in the knowledge that your claim won’t be rejected is below the UK legal driving limit.

The annual premium is the key factor for most people when they receive their insurance renewal, but a read- through of the individual cover and exclusions is equally important in the long run.

Andrew Hagger is an independent personal finance analyst from moneycomms.co.uk

Suggested Topics
PROMOTED VIDEO
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
News
i100
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
arts + entsSam Smith’s Mobo triumph is just the latest example of a trend
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Compensation and Benefits Manager - Brentwood - Circa £60,000

    £60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

    Data Analyst/Planning and Performance – Surrey – Up to £35k

    £30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

    Wilko Johnson, now the bad news

    Former Dr Feelgood splits with manager after police investigate assault claims
    Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

    Mark Udall: The Democrat Senator with a fight on his hands

    The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
    New discoveries show more contact between far-flung prehistoric humans than had been thought

    New discoveries show more contact between far-flung prehistoric humans than had been thought

    Evidence found of contact between Easter Islanders and South America
    Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

    Cerys Matthews on Dylan Thomas

    The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
    DIY is not fun and we've finally realised this as a nation

    Homebase closures: 'DIY is not fun'

    Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
    The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

    Air New Zealand's wizard in-flight video

    The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
    Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

    Pumpkin spice is the flavour of the month

    The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
    11 best sonic skincare brushes

    11 best sonic skincare brushes

    Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
    Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

    Paul Scholes column

    I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    While other sports are stalked by corruption, we are an easy target for the critics
    Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

    Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

    Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker