Very new to saving...

sara86pink

Hello all

It has been a while since I have been on here but to cut a long story short, in the next month or so I will (finally) be debt free.

Unfortunately, although it has been a few years that I have struggled with my money, it wasnt in fact hard work that paid it off (although it has required a lot of budgeting just to pay the minimum payments!!) I happen to be receiving inheritance which will wipe all my debt and leave me with a clean slate for the first time in 6 years

My question is this, I am now finally in a place to start saving. Not a great deal but I'm looking at £85 a month.

Now, after reading about the types of accounts I have heard that an ISA is the first choice.

My question is (and excuse me as it may be quite a silly one!) if there is an account which has a bonus, is that bonus added onto the AER?

Example of one that I have come across:

3.30% (2.80% bonus for the first 12 months)

Does this mean the actual AER is 6.10% or is it guaranteed to be at least 2.80% but it could go up to 3.30%??

Again, apologies if it is really silly as I just cant get my head around it

Thanks

Perelandra

sara86pink wrote: »

Example of one that I have come across:

3.30% (2.80% bonus for the first 12 months)

Does this mean the actual AER is 6.10% or is it guaranteed to be at least 2.80% but it could go up to 3.30%??

Sadly not, it means you'd get 3.3%.

In the first 12 months, you get the "normal" rate (0.5%) plus the "bonus" rate (2.8%). After 12 months it reverts to the "normal" rate.

So with ISAs (and any form of saving that comes with "bonus" rates) you need to keep switching the money every year to maximum the interest you get.

atush

And save into cash ISAs and savings accts in cash until you have 6 months spending in cash.

After that, you can look into longer term savings, which depends on your situation. But do look at pensions and other equity savings.