Brits are planning on saving more in 2009 – 35 per cent more, according to online bank smile.co.uk, as consumers take more notice of their finances due to the current economic turbulence.
The credit crisis has made 64 per cent of Brits change their attitudes towards spending in the last 12 months; the average British consumer has saved £1,882 in the last year, but is planning to increase this to £2,605 this year, reveals smile.co.uk, the online banking
arm of The Co-operative Bank.
When asked what their primary reason for saving was, 57 per cent of respondents answered that they save for holidays, 48 per cent save up for Christmas, and 32 per cent are motivated to save so that they can buy a new car. Other reasons included shopping for clothes, saving for a deposit for a house, or just having some money put aside for a rainy day.
Those who do not save, explained their lack of saving up for purchases by saying that it takes too long and they would rather just borrow the money than wait until they have enough in their savings accounts
. Others struggle to save because they spend their spare cash on treats instead.
"The research clearly shows that people are becoming much more focused on savings. With the uncertainty in the current economic climate, the findings show that many people are now changing their behaviour and reverting to the ways of previous generations, when saving up for things was the norm", explained John Barker, head of smile savings accounts
Mr Barker recommends that to make the most out of their savings, people should take full advantage of their tax-free savings allowance from the Government and put as much as they can in their ISA
, which allows them to save up to £7,200 each year, tax-free.
But they have to be quick to maximise their savings for the 2008/2009 tax year, because the deadline is April 5, he added.
And it has never been more important to compare savings accounts
, as the average interest rate on savings dropped 0.53 per cent in just 48 hours this week, according to market analysis from uSwitch.com.
In the first two days of February, 34 providers cut the rates on 43 savings accounts, some by as much as 1.25 per cent, continuing to punish savers as the base rate falls, uSwitch said, with another rate cut expected when the Bank of England's Monetary Policy Committee meets today. Fixed rate savings accounts
have been the worst hit, the comparison website found, falling by an average of 0.58 per cent.
"With the next MPC meeting fast approaching, we can't help feeling that savings providers will continue to cut rates regardless of the outcome," commented Rumina Hassam, personal finance expert at uSwitch.com.
"We fully understand that banks are under a lot of pressure as they experience the toughest economic climate since the early nineties; however it does seem shortsighted to cut rates by more than the base rate decrease. Surely, now more than ever savings providers should be doing whatever they can to encourage people to save rather than removing the main incentive?"
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