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One in seven adults has no savings while £260bn earns no interest

Written by: Rebecca Goodman
One in seven UK adults has no savings and a third do not have enough savings to cover even one month if they lost their income, new research has revealed.

Of those that have some money put away, 36% are relying on their savings to get through the cost-of-living crisis, according to the data from the Building Societies Association (BSA).

More than half of the 2,000 adults asked said they had reduced the amount they regularly put into their savings.

Over a third (35%) have stopped saving altogether as a reaction to rising prices.

The average amount saved per person is £17,356 but there is a big gap between those with savings and those with none.

More than £260bn is in accounts paying no interest

Following the Bank of England’s interest rate rise last week, a number of savings providers reacted by putting up the interest they pay. The market-leading account now pays over 4% and several accounts have increased the amount of interest on offer.

Yet more than £260bn sits in savings accounts that pay no interest at all.

With prices rising, and inflation soaring above its target of 2%, it’s important to try and get the best rate possible for any savings you have.

Yet the research from the BSA showed that 23% of savers don’t check the interest rate paid before they open an account, and 33% never compare the rate available to other accounts on the market.

In fact just 30% have switched to accounts which provide cashback rewards, bonuses or have lower fees.

Creating a regular habit is often the best way to start saving

This news comes during UK Savings Week which is organised by the BSA. Its aim is to make people more aware of the savings rates on offer, to help people to save more, and to increase the levels of interest they are paid.

Even putting away a small amount of money can help. Around two thirds (64%) of those with no savings said they could start to put away £10 a month.

If this money is in an easy-access account, it can be taken out without penalty when it’s needed.

But it will still earn some interest, and be available to pay for unplanned events such as a car failing its MOT, the boiler breaking, or a loss of income.

Challenging times ahead

Rocio Concha, Which? director of policy and advocacy, said: “It’s clear that the next few months will be an incredibly challenging time for millions of households.

“The government must be prepared to move quickly to provide further support to households most in need, while businesses in key sectors such as energy, telecoms and supermarkets should do all they can to help consumers find good deals and protect those facing serious financial hardship.”

Andrew Gall, head of savings and economics at the BSA, commented: “Whilst the midst of a cost-of-living crisis might seem like an odd time to launch activities encouraging good savings habits, those who are able to save can benefit from building their resilience to future shocks.

“When, how and how much people save will be different for everyone and UK Savings Week aims to help individuals to save their own way, when they can. And for those who are already savers, UK Savings Week aims to help people think about making the most of their savings.”

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