A new government scheme is set to help people in Sheffield avoid the cycle of debt.
The ‘Help to Save’ scheme has been implemented to support working people on tax credits and Universal Credit build their savings.
The scheme is being praised for helping people with a few too many demands on their money to prioritise saving.
Sarah Le Blanc, 35, a Sheffield Social Enterprise Consultant, said: “Many clients I’ve worked with who struggled with housing debt ended up in that position where an unexpected financial emergency, like a car breaking down, have pushed their household finances to breaking point.
“Help to Save will help those households to build up a buffer that will hopefully help them avoid that cycle of debt.”
Savings between £1 and £50 can be made every calendar month and you can save or pay in as much money as you choose -with accounts lasting for four years from the date opened.
After two years, there is a 50% tax-free bonus on savings and if you continue saving you could get another 50% tax-free bonus after four years.
Hasham Ali Abbas Mahroof, 20, a Sheffield Liberal Democrat member, said: “It is a well thought scheme and one that will work for many people and is also a great initiative to save money.”
However, there is warning that those eligible should try and clear up high debts that they already have before joining the scheme to avoid further expenses.
Tim Huggan, 52, Councillor for Crookes and Crosspool, said: “A major concern on ‘Help to Save’ was that it would encourage people to save when they should instead be paying off debts, including some extremely expensive ones like payday loans.
“Yet they have managed to work a structure that enables people to save and earn interest that they would not get elsewhere.
“This is a rare ray of light in the debacle of the roll-out of Universal Credit and the impoverishment of many people and families as a result.”
You can apply online if you work and are eligible for Working Tax Credit or Universal Credit through HMRC app, at gov.uk/helptosave or by calling 0300 322 7093.