Tiny amount to save, is it worth it?

HOPEFUL-HEATHER

I have to save a little bit by February 2014, Im talking under £500.
Im really struggling to save anything each month at the minute but this is important so decided to just open a savings account and set up a monthly direct debit.
I automatically went straight to my own bank RBS then wondered if I should shop around.
Ive had a look but all the savings account advice seems to be for much larger sums than mine.
Is it worth looking around to save such a small amount, cant seem to find the right answers on the internet.
Thanking you.

grumbler

With the best regular saving account you can get about £500/2*4%*0.8=£8 net interest when saving £500 gradually over a year. You decide if it's worth it.

• Regular Savings

Anthorn

Saving a small amount you have to weigh convenience against interest rate. For example, moving money from a current account to a savings account will be easier online if they are both with the same bank. You won't be shopping around so you might lose out on interest but it won't be a lot.

An instant access Cash ISA will provide more of a return because it's tax free. But deposits still count against your ISA allowance even if they're withdrawn. Also look for offers and bonuses which will increase the return.

The way I save is to move a balance over £500 in my current account to my savings account which doesn't commit me to a regular savings amount. But I never spend the whole of my income.

Chrisblue1962

I believe that is is good to have a small balance , say £250.00, in a savings account for unforeseen emergencies , such as a car repair bill or broken washing machine. However , if you have debts , such as a credit card, once you have built a small Emergency Fund you would be better paying off your credit card as the amount of interest gained in an account by each £1.00 is far outweighed by the amount charged by the credit card company for each £1.00 you owe - a case of weighing up the Opportunity costs of each option.