Many Britons that are strapped for cash are lowering their savings and cutting their spending to try and bring down their credit card balances that have built up in the last couple of years. Five million people have eliminated their credit card debt in the past year by reducing their savings on average by 5%.
ING Direct, a Dutch owned bank, found savings on average fell by approximately £100 to just under £1700 in the past year. The bank surveyed a number of the population in the UK and 10% say they eliminated their debt in over the last year. The average amount owed on unsecured loans, credit cards and hired purchase agreements fell to an 18 month low says ING to an average of £2,500.
The statistics come as a surprise since many families are pinching pennies to meet the high cost of living throughout the UK. Petrol prices are only 1p short of all time record highs and within the fortnight will exceed even that says AA.
At the same time Britain is in a price hike energy bill with Eon and npower ready to join Scottish Power, Scottish and Sothern and British Gas in increasing typical bills by over 20% in the next few weeks.
The Savings Monitor for ING that is said to track the ordinary Briton’s savings behavior said it is at its lowest point in three years. The horrid rate of .5% from the Bank of England for the past 29 months has not helped either. When it nose dived in March of 2009 so did savings rates this discouraging the average saver from putting away their nest egg.
Not until the latter part of July of this year the average was able to come back over the 1% mark for the first time in 30 months. What is positive in this gloom is that people are turning towards their own savings to pay off debt instead of turning to credit to ease the squeeze.
The report shows there is a determination within the public to reduce even further their debts and to eventually rebuild their savings and the priority for savings is growing little by little. But with the why the current economy is it may prove hard for the average consumer to meet both of these goals in the short term. This raid on savings accounts has caused financial institutes to impose harsh penalties on account holders for dipping in too often.