ICICI savings accounts says debt will overtake saving this month

20 February 2009 / by Rachael Stiles
Brits will borrow more than they save this month, as they strive to keep up with living costs, according to research from ICICI Bank.

To get an idea of how British families are coping with the credit crunch and the state of their household finances, HiSAVE - the online arm of ICICI savings accounts - asked Brits how they planned to save, spend, invest and borrow in February.

The study revealed that Brits are becoming increasingly aware of the importance of saving, and are duly investing at least 40 per cent of their disposable income into savings accounts each month, but the equivalent to 65 per cent of their disposable income would be borrowed on credit cards, loans, or overdrafts.

But those who do save are "in the dark" on how much their savings are earning, HiSAVE said, as 53 per cent of savers admitted they have no idea what interest rate they are getting, and those that did know said they are earning a rate of two per cent or less, with 17 per cent earning just 0.1 per cent on their savings.

HiSAVE was also concerned to find that a large number of people are going for high street accounts, without making the effort to compare savings accounts from other providers to ensure they make the most of their money.

"Millions of Britons are coping with the economic uncertainty by adopting parallel strategies to saving and spending." said Deepak Varghese, head of retail banking and HiSAVE savings accounts at ICICI Bank.

Mr Varghese explained that "Many are keeping their spending and short term debts in a separate pot to their rainy day fund and, as Britain continues its move further into recession, it is likely that more people will want to build up an emergency savings fund to protect their homes and family during uncertain times."

"Whilst encouraged by the news that millions of people plan to save regularly," he concluded, "we are alarmed that so many people fail to shop around for a better rate to ensure their hard earned money really works hard for them when saved."

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