Jam Jar Accounts: Will They Set the Standard in Smart Banking?

Over the last few years, various people have been badly affected by the economic downturn. It has not been kind on many people’s finances, so a lot of people find themselves relying on overdrafts and credit cards to respond to rising living costs. However, a number of banks, as well as the British government, are now working on a new solution that could really help citizens avoid debt: jam jar accounts.

While the name may not ring any bells with a lot of people, jam jar accounts are an extremely clever way of working with money on a monthly basis, and ensure that all bases are covered – all the while working against the threat of debt. The “jam jar” element of these accounts is the way a single account is split into three distinct pots, dealing with personal spending, standing bills and savings. Limits on each one can be set by the bank or customer, depending on their circumstances.

The particularly clever thing about jam jar accounts is the automation involved between the three. A larger support framework keeps things balanced, so standing bills are always covered, prioritizing these above personal spending. Budgeting and bill payment behavior will be updated through low-balance alerts via text or email, notifying the account owner of automated fund transfers that are made between jam jars to avoid people going into the red.

On top of this, trained “money managers” are on standby at any time for people to speak to, and these experts give personalized budgeting advice as well as direct access to consumer services like the Citizens Advice Bureau, should further help be needed.

These accounts have received the backing and recognition of a number of organizations. Alongside ethical banking institutions – which naturally operate these offerings – the Fair Banking Foundation also promotes their usage. While trusted services such as local authorities are slow on the uptake, the issue is being brought up in parliament by MPs, with notable consumer rights champions.

Of course, this all comes at a small price, though not an excessive amount. Treasury-commissioned reports are currently pushing for prices of between £5 and £7 a month, which works out at an average of £1.50 a week. This effectively means that one snack or coffee a week is all a person would have to sacrifice for peace of mind.

By High Yield Savings Accounts

The founder and editor of with a passion for personal finance and experience in the financial industry.