Britons reduce current account balances and dip into ISAs
by Gill Montia
HSBC has revealed that its current account holders have, on average, 5% less cash on deposit than one year ago.
According to the bank, the typical balance for a UK customer is now £950, down from pre credit crisis average of £1,000.
While some of HSBC’s 8.2 million current account customers are no doubt struggling with rising living costs, the decline may also be due to consumers taking a greater interest in making their money work, as deposits in the group’s savings accounts have risen 19% over the past 12 months.
However, research from Abbey Savings shows that Britons are increasingly dipping into their savings.
Withdrawals from 2007/08 ISAs have risen to an average £579, with one-third of those questioned admitting they had withdrawn money from an ISA to pay daily living expenses.
A further 15% used the money to meet mortgage repayments or utility bills, while 25% had been caught short with an emergency or unforeseen cost.
Extracting money from a cash ISA is not an ideal way of topping up regular income because part of the tax allowance of £3,600 is lost forever, once a withdrawal is made.