MARTIN Lewis has issued an urgent warning to everyone with a savings account as a silly mistake could cost you a mega £180.
The Money Saving Expert, 51, shared advice on his website which could help you chose the right account and save hundreds of pounds.
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The money pro highlighted that there are many different types of savings accounts out there, and picking one can be confusing if you’re not sure what each one does.
His handy guide focuses on the top-pick “standard” savings accounts but he says there are other methods to boost your return.
“If you’ve got debts or a mortgage, overpaying often beats saving,” his site reads.
He advises those in this position to clear any expensive debt before they begin saving.
As an example, he says that £1,000 in top savings earns up to £20 a year but if you have credit card debt then this could actually cost you.
“£1,000 debt on a credit card with an APR of 18 per cent costs £180 a year,” he warned.
“Clear the debt with the savings and you’re £160+ better off,” he added.
Martin also highlighted that this goes the same for mortgages, but with an added few catches.
He claimed that mortgage overpayments are at a 20-year high as a result of interest rate hikes – and overpaying your mortgage should be a “serious consideration” if you have the cash.
“Rates on savings have also improved, so those on older mortgages may actually do better in savings,” he added.
Martin explained that overpaying your mortgage can be a huge cash boost as you’ll essentially be eating into the debt you’ve built up from buying a home, meaning you can be mortgage free sooner.
He also highlighted that you don’t pay interest on the amount you overpay and the money you’d save on interest often beats the returns possible by putting it in savings.
“The gains can be worth £10,000s,” he said.
Within the guide, the Money Saving Expert also advises those that require instant access to their cash to opt for an easy-access account.
These allow customers to make withdrawals at will – but they also tend to pay lower rates than many other types of account.
Keeping an eye out for introductory “bonus” rates can be helpful too as they often promise some interest.
“But it is vital to remember the end date for the bonus and switch as soon as it ends, so you don’t languish on a rubbish rate,” he added.
Martin added three extra boosts that are higher payers which give you some access to your cash – should you need it.
Boost one is a fixed cash ISA which allows you to access cash in an emergency which is ideal for those that are unlikely to touch the money but want insurance that they can if they need to.
Boost two is using a notice account if you know, or will know, when you’ll need to withdraw money, such as those saving for a home.
Boost three are short-term fixes which are perfect for those who know exactly when they will need the cash as you have the option of locking the money away for six or nine months.
This advice comes after Martin Lewis issued a warning to anyone who opened a Cash ISA more than six months ago as they could lose thousands of pounds.
He also urged people to stop making the same mistake with their credit cards as it could you £1,000s.
