The pounds 50 plan

Regular saving - even a small amount each month - radically improves your options.

Ken Welsby
Tuesday 01 July 1997 23:02 BST
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Are you planning a holiday? Thinking of buying a car, or a new house? Or have you simply discovered the awful truth that - ignoring Sundays - there are only 144 shopping days left to Christmas.

Whatever your plans, saving can make them easier to achieve. And with interest rates on the up, it makes sense to save more and borrow less. An effective strategy will depend on how long you intend to save for, and how much you can afford to put aside. Say you want to put away pounds 50 a month for the next year; the best place will be in a savings account with a bank or building society.

Building societies - particularly the remaining majors such as Nationwide and Bradford and Bingley - are emphasising their mutual status by upping the rates they offer savers, particularly on notice accounts.

The first rule of savings accounts is this: the more notice you can give before making a withdrawal, the better the rate of interest you can expect.

Another rule is that you can earn more interest by investing a larger sum. So if you already have a savings account, perhaps for emergency cash, the sensible course is to put your regular savings into this existing account rather than opening another one.

The other advantage of adding to existing savings is that many of the remaining building societies are cracking down on carpetbaggers - who open multiple accounts in the hope of conversion windfalls - by raising the minimum balance for new customers.

Within the last few days, for instance, the Cheshire has raised its minimum from pounds 1 to pounds 1,000 for customers within its branch area in the North-west - but if you live outside the area, you will need at least pounds 5,000.

So if you have two or three accounts it may make sense to combine them, and find the best rate for the total amountn

Without a windfall, the only way to afford life's little luxuries is through saving - and with interest rates on the up, it makes sense to save more and borrow less Photograph: Reuters

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