Savings crunch: How the credit crunch has affected the UK's savings

15 April 2009 / by Rebecca Sargent
• 47 per cent of savers have had to dip into their savings

• 31 per cent have changed the way they save

Following the unexpected collapse of a number of financial institutions and the consistent tumble of interest rates, takes a look at the saving habits of the UK, and how they have changed since the onset of the credit crunch.

A recent survey from* found that the average amount saved each month is £128, a fall of more than £10 compared to the £138.64 that people said they saved each month back in August last year.

However, in addition to the actual amount saved each month experiencing a small drop, the survey found that savers have also changed their habits in other ways.

Firstly, the study found that 47 per cent of savers have had to use some of their savings since the credit crunch began. The amount used ranges from between 91 -100 per cent, which five per cent of respondents admitted to, to 1 – 10 per cent of the amount saved, which 18 per cent of savers have had to use.

Meanwhile, the way that people save has also changed, as 31 per cent of savers say they have altered the way that they save in some way. In fact, eight per cent of savers said they have split their savings to reduce risk, while six per cent have decided to keep them in cash at home and a further eight per cent have had to reduce the amount that they save.

The research also found that the fall of Icelandic savings bank Icesave has dented the UK's confidence in foreign companies, as 56 per cent said they would not keep their cash in a savings account with a foreign company since its collapse.

And, as the UK economy remains turbulent, the study also found that 20 per cent of savers think that the safest place for their cash at the moment is at home in a safe or under the bed.

Commenting, chartered financial planner at Sharon Bratley said: "Savers have so far been some of the hardest hit victims of the credit crunch, particularly as savings interest rates continue to fall faster than mortgage rates and banks struggle to keep their heads above water.

"It is hardly surprising that trust in banks has been diminished after things like the fall of Icesave and the bailout of HBOS. However, there are still savings accounts out there which offer a higher rate than under your bed!

"Meanwhile, as long as the amount saved is below £50,000 and the savings provider is covered by the Financial Services Compensation Scheme (FSCS), the savings will be compensated in the event that an institution fails," Mrs Bratley added.

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*Research conducted for by OnePoll with 2,000 respondents in December 2008