We all want to save money – whether it’s £10 a week or £1000 a month, we have different goals and different reasons for saving money in the first place. But one thing which does tend to be quite common among people who are trying to save is knowing an effective way of saving.
You’re probably already aware of the most typical saving methods; putting cash into a jar, saving your change, transferring money straight into your savings once you’ve been paid instead of transferring the remaining income before you get paid. But did you know that some bank accounts could automatically help you save by categorising your spending and ‘saving the change’ for you?
Neo banks commonly have these features, and not only are they easy to use and seamless in terms of the customer interface, they do so much more than just act as a basic bank account.
What is a neo bank?
A neo bank is . They are entirely digital so it’s all online only, but most of them have call centres based in the UK which are manned 24/7 so help is always available should you need it. It’s an online set up including video identity checks but it’s still quick and you still receive your debit card within a few days.
While some mainstream banks are starting to cotton on to the idea of actively encouraging responsible borrowing habits and making saving easier, neo banks were at the forefront of this, they were essentially the pioneers which changed the way customers use online banking.
There’s nothing wrong with visiting a branch or having a straightforward bank account, but if you are looking to save extra cash and you know you find it a little difficult to motivate yourself to save it, then a neo bank could be the answer.
How does a neo bank help you save?
Categorisation
If you open a bank account with a neo bank, one of the first things you’ll notice is the categorisation of your spending. It might not seem lifesaving at first but being able to visualise where you are spending your money is the first step in reducing your invisible spending. From here, you can easily determine how much you spend on rent, bills, food and general shopping. Some will even tell you how much you spend on eating out – including takeaway coffees, which might be a little hard to come to terms with at first!
Knowing where you spend your money will immediately help you reduce your spending. You’ll be more conscious of unnecessary purchases because you’ll be able to see the amount of money building up.
Rounding Up
As well as categorising your purchases, you can enable a ‘round up’ function in your bank account which automatically diverts the remaining pence to the nearest pound into your savings. For example, if you made a purchase of £5.50, then 50p would automatically be added to your savings. It might not seem like huge amounts at first, but if you use your card every day, your savings pile will very quickly grow into a nice sum. Additionally, you can normally increase the amount that gets diverted to your savings as well; sometimes there is a x2 or x3 function, so instead of just diverting the 50p it will divert £1 or £1.50, respectively. It’s so easy to save when you don’t have to think about it.
Saving Jars
Not all, but most neo bank accounts also have a function that allows you to save money into a separate section while still keeping your funds in the same account. It means you can quickly transfer money into your saving section, without locking it away or needing a separate card to access the funds should an emergency arise. Because the money is easily accessible, it might take a bit of willpower to keep the savings money saved at first, but once you see your savings start to build and reach your goal, it won’t be so difficult to stop dipping into it.
Are there any disadvantages to neo banks?
Neo banks are digital banks and while the technology is seamless and the security is high, some people simply prefer to talk to someone in person, and as neo banks do not have any physical branches, this is not something they can accommodate. There are other drawbacks too: because there are no branches, you typically have to visit a post office to pay any money into the bank account, so if you deal largely in cash, this could become time consuming as the reduction in the number of post offices across the country mean the remaining ones are increasingly busy. However, you can still withdraw funds from any normal ATM machine.
Although they are completely digital, neo banks still have help centres where you can talk to people over the phone to resolve any queries and normally there are no excessive wait times to get through to a call handler, unlike some high street banks.
Ultimately, where you bank your money is up to you and there’s no benefit to being a loyal customer with most banks, so you may as well try out a few different ones to see which account works for you the best (although maybe not at the same time as having multiple bank accounts may act as a hindrance when trying to manage your finances).
Look for an account with all the functions that you need – whether that’s a comprehensive mobile app, physical branches to visit or simply just a bog standard bank account that allows you to spend and receive money as you wish. Bank accounts are entirely personal, so make sure it works for you; although if you are looking for easier ways to save, it might be worth checking out a neo bank!
