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.
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