Saving pots hit three-year low - Savings - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Saving pots hit three-year low

Saving pots hit three-year low

Category: Savings

Updated: 28/02/2012
First Published: 28/02/2012

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Last year saw Brits battle to build up their savings pots, leaving each saver £260 worse off compared to 2010.

ING Direct's research showed that savings remained close to a three-year low, with balances falling by more than 14% in 2011.

Hardest hit were mid-life savers aged 45-54, who saw their savings sliced in half (50%), largely due to increasing costs of fuel, utility bills, groceries and childcare.

Those earning less than £22,000 also felt the pinch, with their savings balances falling by 32%.

However, young savers finished the year on a high, with those aged 18-24 and 25-34 growing their savings pots by 13.6% and 41.8% respectively.

The research also revealed that more people reduced their debts in 2011, with average borrowing on credit cards, hire purchase agreements and personal loans falling by 21% last year - the lowest level recorded since tracking began in January 2009.

"As the financial constraints on households continue to tighten, people are still facing a difficult balancing act and are sensibly continuing to pay down their short-term debt," commented ING Direct CEO Richard Doe.

"As usual, something has to give and it is people's rainy day savings funds that have fallen, with some groups left harder hit than others."

With the Consumer Prices Index (CPI) falling to 3.6% in January, there is some hope for the 41% of respondents who said that they would make saving their financial priority in 2012.

"However, plunging inflation through 2012 will ease the burden on households and could facilitate higher saving, lower borrowing and rising spending later this year. This could empower consumers to start re-building their savings buffers - and it's clear from the research that this is what they intend to do," added James Knightley, ING's senior economist.

At present, there are over 40 standard savings accounts available that pay enough interest to negate the effects of inflation, a vast improvement from September 2011 when CPI reached a year high of 5.2% and there were no regular accounts that beat inflation.

Find the best savings rates for you - Compare savings accounts

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.