7.5 million Brits would resort to credit to cover household emergencies

11 June 2008 / by Daniela Gieseler
In the event of a household emergency such as a boiler breakdown or a broken electrical appliance over 7.5 million Britons would have to rely on credit, new research from Alliance & Leicester Savings suggests.

The old wisdom of "saving for rainy days" seems to have gone out of fashion, as only a third of Britons said they had savings they could use to replace or repair faulty appliances.

One in six respondents (16 per cent) admitted they would have to rely on credit to fund a basic household breakdown, and one in five (21 per cent) would struggle to rustle up £100 pounds.

Almost half stated they could spare no more than £500 for repairs or a replacement, which does not go very far considering a plumber call-out charge costs £100 and a new washing machine as much as £300. Only one in three would be able to cover a major expense in excess of £1,000.

If forced by an emergency to find the money, 5 per cent said they would borrow from a friend or relative, 2 per cent said they would sell something. However, almost one in ten admitted they did not know how to cover the cost if something broke down implying a reliance on loans and credit cards.

The study reveals that Brits are feeling the crunch even more than expected, and with rising food and energy prices even a minor household problem could cause considerable strain.

20 per cent of respondents confessed they had had difficulties in the past to pay for unexpected household breakdowns, and a further 21 per cent had been prevented from replacing appliances immediately due to cash flow problems. Worryingly, 45 per cent revealed they did not specifically save up for emergencies.

"The reality of being a homeowner means that at some point you will inevitably have to pay out for repairs such as broken boilers and faulty appliances, " Hetal Parmar, Manager for Savings at Alliance & Leicester, commented, "We would encourage people to start saving sooner rather than later to avoid a basic household emergency becoming a financial headache."

The survey also showed that over two thirds of Britons do have savings of some kind, and a fifth have a regular savings plan.

Hetal Parmar recommended: "The soaring cost of living will undoubtedly mean incomes are stretched but even by just putting a small amount aside each month you can easily build up a household fall-back fund in no time."

© Fair Investment Company Ltd.