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| Savings fall as austerity squeezes household budgets | Savings fall as austerity squeezes household budgets |
| (6 days later) | |
| British consumers are saving less than they were a year ago, with almost a quarter saving nothing at all, according to a survey. | British consumers are saving less than they were a year ago, with almost a quarter saving nothing at all, according to a survey. |
| The average monthly saving is now £87, down from £100 a year ago and £95 over the winter, according to National Savings & Investments' (NS&I) quarterly savings survey, which indicates people are fed-up with the lack of decent returns following three years of record low interest rates. | The average monthly saving is now £87, down from £100 a year ago and £95 over the winter, according to National Savings & Investments' (NS&I) quarterly savings survey, which indicates people are fed-up with the lack of decent returns following three years of record low interest rates. |
| The 23% of people who saved nothing in the second quarter of 2012 marked an increase from the 17% failing to save between January and March – an increase of about 3 million people nationwide, according to NS&I. | The 23% of people who saved nothing in the second quarter of 2012 marked an increase from the 17% failing to save between January and March – an increase of about 3 million people nationwide, according to NS&I. |
| "It is no surprise that many people are saving less," said Andrew Hagger of Moneynet.co.uk. "With many savings rates still historically very low, those with surplus funds are wisely using their money to pay down expensive credit card, overdraft and mortgage borrowing." | "It is no surprise that many people are saving less," said Andrew Hagger of Moneynet.co.uk. "With many savings rates still historically very low, those with surplus funds are wisely using their money to pay down expensive credit card, overdraft and mortgage borrowing." |
| But the survey also suggested the government's austerity measures are continuing to hit household finances. People in the 35 to 44 age group – often those with children to support – particularly struggled to save over the spring. They put away 5.8% of their income in the second quarter of 2012 compared with 7.6% during the winter, and more than a quarter (28%) did not save anything at all. | But the survey also suggested the government's austerity measures are continuing to hit household finances. People in the 35 to 44 age group – often those with children to support – particularly struggled to save over the spring. They put away 5.8% of their income in the second quarter of 2012 compared with 7.6% during the winter, and more than a quarter (28%) did not save anything at all. |
| "It is only very recently that inflation has started to recede, which means there is often very little spare cash at the end of the month, once essential bills have been paid," Hagger said. | "It is only very recently that inflation has started to recede, which means there is often very little spare cash at the end of the month, once essential bills have been paid," Hagger said. |
| Recent Bank of England figures showed unsecured debts almost doubled in May, raising concerns that households are borrowing to fund everyday spending. | Recent Bank of England figures showed unsecured debts almost doubled in May, raising concerns that households are borrowing to fund everyday spending. |
| However, households recently said they were more optimistic about their finances than at any time for two years, despite reporting the sharpest fall in wages for five months, according to the Markit household finance index. The prospect of lower inflation improved the outlook of most households in June as they looked forward to closing the gap between wages and rising prices over the next year, Markit said. | However, households recently said they were more optimistic about their finances than at any time for two years, despite reporting the sharpest fall in wages for five months, according to the Markit household finance index. The prospect of lower inflation improved the outlook of most households in June as they looked forward to closing the gap between wages and rising prices over the next year, Markit said. |
| Those who have money to put aside could be forgiven for ignoring Britain's bigger banks, given the IT meltdown that has affected millions of RBS, NatWest and Ulster Bank customers, and the Libor rate-fixing scandal blighting Barclays. | Those who have money to put aside could be forgiven for ignoring Britain's bigger banks, given the IT meltdown that has affected millions of RBS, NatWest and Ulster Bank customers, and the Libor rate-fixing scandal blighting Barclays. |
| But Hagger said there are plenty of decent rates available on savings accounts and bonds at building societies, but customers need to be quick if they want to apply. According to Moneyfacts, the length of time a fixed-rate bond is on the market has fallen to just 30 days, the lowest level since December 2008. It means savers must rush to secure the best deals before they become oversubscribed. | But Hagger said there are plenty of decent rates available on savings accounts and bonds at building societies, but customers need to be quick if they want to apply. According to Moneyfacts, the length of time a fixed-rate bond is on the market has fallen to just 30 days, the lowest level since December 2008. It means savers must rush to secure the best deals before they become oversubscribed. |
| For instant-access accounts, Hagger recommends the Coventry building society Telephone Saver paying 3.25% (including a 1.25% bonus for 12 months, with a minimum investment and minimum withdrawal of £500). | For instant-access accounts, Hagger recommends the Coventry building society Telephone Saver paying 3.25% (including a 1.25% bonus for 12 months, with a minimum investment and minimum withdrawal of £500). |
| Kent Reliance's Direct Savings Account pays 3.2% on a minimum investment of £1,000 and is a "good, no-strings account with no short-term bonus or withdrawal restrictions", according to Hagger. | Kent Reliance's Direct Savings Account pays 3.2% on a minimum investment of £1,000 and is a "good, no-strings account with no short-term bonus or withdrawal restrictions", according to Hagger. |
| The Co-operative Bank offers a one-year savings bond paying 3.5% (minimum deposit £1,000), while Kent Reliance pays 3.4% on a minimum £1,000. Coventry pays 3.65% over 18 months with a minimum of £1, while the best two-year bonds are also offered by the Co-op (3.75%, minimum £1) and Kent Reliance (3.51%, minimum £1,000). | The Co-operative Bank offers a one-year savings bond paying 3.5% (minimum deposit £1,000), while Kent Reliance pays 3.4% on a minimum £1,000. Coventry pays 3.65% over 18 months with a minimum of £1, while the best two-year bonds are also offered by the Co-op (3.75%, minimum £1) and Kent Reliance (3.51%, minimum £1,000). |
| For longer-term savers, Co-op's three-year savings bond pays 4% (minimum £1,000), closely followed by Kent Reliance (3.75%, minimum £1,000) and Principality building society (3.51%, minimum £500). | For longer-term savers, Co-op's three-year savings bond pays 4% (minimum £1,000), closely followed by Kent Reliance (3.75%, minimum £1,000) and Principality building society (3.51%, minimum £500). |
| Check out the best savings accounts through the Guardian's Moneydeals site | Check out the best savings accounts through the Guardian's Moneydeals site |
| Top savings accounts | Top savings accounts |
| Skipton BS | Skipton BS |
| Manchester BS | Manchester BS |
| West Brom BS | |
| Powered by MoneySupermarket for the Guardian | Powered by MoneySupermarket for the Guardian |