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'Significant number' dip into savings every month to afford bills

'Significant number' dip into savings every month to afford bills
Matt Browning
Written By:
Matt Browning

Households in the UK are dipping into their savings an average of three times per month to pay for essential bills, a comparison site finds.

Almost half (45%) do so at least once per month and one in five (21%) need to at least once per week, according to Compare the Market’s Household Financial Confidence Tracker.

However, not everyone has that privilege, as a quarter (27%) of the 2,000 respondents said they were unable to save anything at all, with the same proportion putting away between £100 and £250 each month.

On average, people are able to save £432 every month, which also marks a positive mood many families hold about their finances, despite many people’s struggles.

Nearly two-thirds (61%) are feeling optimistic about their money matters, whereas just over one in three (39%) feel the opposite way.

This signified a more positive feeling than in January this year, when a quarter of households said they found it difficult to pay for their recent round of bills.

Confidence in finances is improving

Now, over three-quarters are confident about managing their utility bills, and half (47%) are ‘quite confident’ they can do so.

Meanwhile, a separate study earlier this year found that a growing number of families were falling behind on ‘high-priority bills’ like gas and electricity.

The measures many struggling families take to pay for their essentials have seen a holding-back of buying clothes, going on holidays and eating out. This impacted 42%, 36% and 48% of respondents.

But, while cutting back is one way of battling the cost-of-living crisis, a fifth of Brits are using their credit card but only managing to make the minimum repayments.

Indeed, less than half pay their full credit card balance in full every month.

‘Encouraging that people are confident’

Andy Hancock, chief growth officer at Compare the Market, said: “It is encouraging that people are seemingly confident about their ability to manage and pay their everyday bills in the summer months ahead, signalling a positive outlook on the consistency and reliability of their financial situations.

“However, our research shows that many people are still struggling to save on a monthly basis, and a significant number are having to rely on those savings each month to pay for everyday bills or lean on credit cards for additional costs such as holidays.

“Credit cards can be a valuable tool for making purchases, such as paying for holidays.”

Hancock warned credit card holders not to borrow more than they can afford and to try to pay off the outstanding balance in full to avoid paying hefty interest costs.

He added: “Households can potentially benefit from shopping around to find a deal on credit cards and loans, as well as home and travel insurance policies in the summer months ahead.

“Understanding which available policies can save you money on everyday living costs can not only decrease those outgoing spends, but also contribute to an individual’s monthly savings pot.”