Savings increase ahead of unsecured borrowing

by Gill Montia

Story link: Savings increase ahead of unsecured borrowing

Alliance & Leicester’s (A&L) latest research on UK savings habits has found that savings have nearly doubled since 2000.

According to the bank’s Changing Face of the Savings Market report, balances have increased £426 billion in seven years, well ahead of unsecured borrowing, which has increased by £79 billion.

A&L Savings expects the trend to continue, having found that 39% of those surveyed plan to increase their balances over the next five years. At this rate, personal cash savings could reach £1 trillion in 2012.

The survey also revealed more awareness of tax efficient savings, such as ISAs.

The use of cash ISAs has increased 124% since 2002 and they now account for one-fifth of all cash savings.

Ewan Edwards, Head of Savings at A&L comments: “Five years from now Britain’s savvy savers are likely to have over a third of their cash savings in tax efficient accounts such as ISAs - a massive increase from five years ago, when just a seventh (14%) were sheltered from the tax man in this way.”

However, 24% of respondents to the survey have no savings, with the majority attributing this to a lack of surplus income.

Increased use of the Internet and price comparison websites is changing the ways in which people save; 40% of cash savings are now managed online

Over half the nation’s cash savings are in instant access accounts with the average account balance up 60% on 2002, to over £5,000.

Notice Accounts have become less popular in the past five years, and now make up only 8% of the market, compared with 23% five years ago. Some expect this type of account to disappear altogether.