Filling the gap from public spending cuts

Use all your savings account options to give yourself a financial safety net.

10:45 01 May 2013

Lately there has been much discussion regarding reducing spending and public funds. This leaves many people worrying about gaps in their finances and how they will be able to make up the differences.

 

Some may be faced with having to get a second job, while others may not have such an option available to them. Establishing a savings account may be a beneficial way to plan for the future in the event of economic difficulties.

 

What types of savings accounts are there?

 

• There are regular savings accounts without annual caps on deposits.
• Individual Savings Accounts (ISAs) which DO have annual caps on how much can be deposited.

 

Which one is best for you?

 

• Regular savings accounts—this type of account is best for those who may need to withdraw their money at a moment’s notice and need to be able to do so without paperwork or other issues.

 

• ISAs—these savings accounts are perfect for the long term saver who mostly likely won’t need the funds quickly. This is geared more towards building up amounts that can accrue interest so that you will benefit from a little extra than your original deposits.

 

What types of ISAs are there?

 

• Cash ISAs—these offer a high level of security, but because your invested amount is guaranteed, you receive a lower rate of return.

 

• Stocks and Shares ISAs—these savings accounts allow you the potential to earn a much greater return on your investment, but because this is a high risk investment, you could also lose everything you put into this account.

 

• Junior ISAs—these are specifically for children, and at the age of 18 the ISAs will automatically roll over into the possession of the child.

 

What if I want more than one savings account?

 

You can have both cash ISAs and stocks and shares ISAs but the annual deposit limit remains the same as it would be if you had just one of these savings accounts. You can also have a regular savings account to keep for more accessible funds.