Four Things You Need To Know About Saving

#1 DON’T SAVE IF YOU HAVE DEBT

It’s a losing battle. You pay more interest on your debt than the amount of interest you get back from your savings. Your best defence? Clear credit cards, bank loans and store cards before you start squirreling any of your hard-earned cash away. Heck you could even try to put a dent into your mortgage debt if you’re that determined!

Example:

£3000 credit card debt at 12% interest = £360 PAID

£3000 savings at 1% interest = £30 RECEIVED

You are losing £330 every year!

#2 YOU CAN AVOID PAYING (SOME) TAX ON YOUR INTEREST EARNINGS

Here’s how: Make like Donald Trump and understate your salary. Or (and here’s what MOXI strongly suggests) look up your ‘PSA’ – that’s short for Personal Savings Allowance – launched this year by the government to encourage us to save. The PSA allows you to earn interest tax-free, up to a certain amount. To find out what yours is click here.

#3 SAVE IN A CURRENT ACCOUNT

This is a well-kept secret: Selected current accounts pay the highest interest. Yep, even higher than saving accounts or Cash ISAs! What’s the catch? You only get interest up to a certain balance so they’re best for when you first start saving. Once you’ve hit the max current account balance, look at high interest fixed-term saving accounts for the rest of your dosh. Check out the highest paying bank accounts here.

#4 WHAT YOU DON’T NEED IS A CASH ISA

They were created so you could avoid paying tax on interest but since the government launched the Personal Saving Allowance (PSA), your Cash ISA may be redundant. If you’re a basic rate tax payer – you’re making from £11,001 to £43,000 – you can earn £1,000 interest a year tax free. And, if you're a higher-rate tax payer – your salary fits between £43,001 to £150,000 – you can earn £500 in interest tax-free. If your salary is over £150,000, I’m afraid there’s no PSA for you so a cash ISA will be your BFF.