Thanks to the rise of challenger banks, an increasing number of banking apps now offer ‘savings pots’ to help you to get into the savings habit. These pots can be ideal for saving for particular goals and help you set aside money to pay bills and other expenses.
How do savings pots work?
Savings pots typically sit alongside a current account (sometimes a savings account) with that particular provider.
In many cases you can open more than one savings pot and can give your savings pots separate names so you can distinguish between them. You can then set aside money for different goals. For example, you might have one savings pot for holiday savings, another for building a house deposit, and another for emergency funds.
This helps you to have a clearer idea of what you’re saving for and how soon you’ll reach your goal.
Many of these banking apps also offer spending insights to make it easier for you to work out how much you can set aside each month.
Banking apps that offer savings pots
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Get a £20 welcome bonus when you spend your first £20 (T&Cs apply).
Revolut's savings pots are called 'Pockets'. They are linked to your main Revolut account and you can select a name and image for each Pocket to match your savings goal. You'll be able to set up one-time or recurring transfers into your Pockets from your main account - these can even be in different currencies. What's more, you have the option of setting up Group Pockets that can help you to save with friends and family for a common goal, such as a holiday.
Like many of its competitors, Revolut also offers a round-ups feature that lets you transfer the spare change from your spending into your chosen Pocket. Plus, you can easily track and monitor your spending in the app so you know how much to save each month.
Pros
Low overseas fees
Quick sign-up
Earn cashback on spending
Set budgets for financial goals
Virtual cards for online purchases
Easy to transfer money internationally
Linked Revolut <18 account available for one child
Cons
1% currency conversion charge on weekend spending abroad
Free cash withdrawals in the UK and abroad both limited to £200 per month
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Bottom line
Savings pots can be a great way to help you save for specific goals, such as a holiday or new car, but you can also use them to set aside money for essential bills and other expenses. Separating your money in this way can make it much easier to stay on top of your finances and take some of the stress away when it comes to managing big events such as Christmas or birthdays.
Sources
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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time.
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