Britons get back in the savings habit

May 20, 2009

After years of rapidly increasing debt levels, latest research from Mintel finds one in five Brits plan to enter a savings spree.
While almost a third of people (30%) are unable to save through lack of funds, and over one in five (22%) is concentrating on paying off debt, new research from Mintel finds the stage is being set for a savings extravaganza.  Indeed, toady, as many as 6 million Brits (13%) intend to increase their savings in the next year or so, while a further 3 million people (6%) who are not current savers intend to start saving soon.
And after the years of investing in property, the research shows just (6%) of Brits preferring to invest in bricks and mortar or equities rather than a savings account.  Today, more than 30 million adults hold a savings account.
Toby Clark, Head of Financial services at Mintel said:
“Pre-credit crunch, the idea of building up rainy day savings was starting to look a little old hat – it seemed much easier to turn to cheap credit or to release a little more money by remortgaging. As credit has become harder to find and the economic climate more uncertain, though, people seem to be rediscovering the savings habit. “
Given the impact of the credit crunch and the weak economic climate, it is not too surprising that so many people feel they do not have the money available to save. A combination of rising unemployment, low personal income growth and the overhang of consumer debt is creating a tough economic climate. But fear of financial uncertainty is stimulating a rise in precautionary saving and limited credit availability is also increasing the need for consumers to save.
With almost 15 million Brits saying they would like to save on a regular basis but cannot do so through lack of funds, it is clear there is a strong latent demand for saving schemes that encourage people to put aside relatively small amounts of cash on a regular basis. ” adds Toby.
The research also shows a relatively high degree of consumer apathy, within the deposit-based savings market. Four in ten adults who hold a savings account say they have had their savings with the same company for most of their lives. In addition, as many as (14%) of savers also admit that they don’t always keep up with interest-rate changes. Almost one in ten account holders said they tend to move their savings about to get the best rates, while one in 14 use price-comparison websites to find the best available rates.
” over the last decade or so, there has been a decline in the level of customer inertia, and savings account providers can now no longer take their customers’ loyalty for granted” . 
The research also highlights the impact that the credit crunch and weak economic conditions have had on the savings market. Almost one in ten respondents has moved their savings to within the government’s guaranteed limits, while one in 20 has moved their savings due to fears over their provider’s financial stability.
One potentially positive impact of the recession is that it is likely to encourage precautionary saving as people try to establish a buffer in order to protect themselves from the financial uncertainties of the current economic climate. One in 14 savers said that the downturn has encouraged them to either start saving or save more, which equates to more than 2 million consumers.

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