Credit crunch prompts many to top up savings accounts

23 May 2008 / by Joy Tibbs
The credit crunch has taken its toll on many households' finances this year but savings levels have still crept up, according to a new study from Birmingham Midshires.

Research has shown that so far this year people in the UK are putting more into their savings accounts and raiding funds less. In the last three months, people have saved an average £938 compared with £910 in the same period a year ago. And people have raided just £1,700 this year, down from more than £2,000 in 2007.

According to Birmingham Midshires, people are saving more to combat rising living costs and to protect themselves against any future economic hazards. However, it found that just 77 per cent of people had saved something in the last three months compared with 80 per cent of people in the same period last year.

One in seven saved up to £5,000 and one per cent managed to save more than £10,000. However, the number of people who do not have enough money to save is increasing – 24 per cent had not saved anything in the last three months compared with 20 per cent last year.

Director of savings and investments at Birmingham Midshires, Tim Hague, said: “This research shows how current market conditions are playing on the minds of Britons. Despite a marked increase in living costs, people are becoming more cautious and managing to save more and spend less, with their financial future in mind."

Despite these findings, people in the UK are still not saving enough according to credit reference agency Callcredit. It claims that 40 per cent of the UK's working population could not live on their savings alone for more than a month, while 25 per cent of people have either reduced the amount they have been saving over the last six months or have stopped saving completely. Five per cent are spending more than 50 per cent of their salary on unsecured debt repayments.

Head of Callcredit Check, Owen Roberts, said: "These findings are a stark illustration of how the credit crunch is already affecting consumers, it's clear that the rising cost of everyday living is having an immediate impact on our ability to save. Many of the UK's workforce are at what could be described as a financial tipping point where just one unexpected unfortunate incident could have dire financial consequences."

Meanwhile, those looking for the best way to save are being warned that 'high interest' current accounts are not always as great as they may first seem. has revealed that many of these current accounts pay just 0.58 per cent on sums above £2,500.

Founder of, Sean Gardner, said: "High interest accounts are a great addition to the market particularly for those with modest balances looking to make their cash work harder.

"But customers need to remember that the tempting high rates are only effective for sums up to a point, normally around £2,500. If you're keeping any more than that in your current account then you should look elsewhere."

©Fair Investment Company Ltd