Consumers are prioritising debts over savings during the credit crunch, it has been found.
Savings accounts are taking a hit as consumers use spare cash to pay off their debts, new research shows. According to a report by Lloyds TSB Consumer Banking, as well as reining in their spending consumers are also curtailing the amount they save.
Of the 5,000 adults questioned, 37 percent said they have been saving less over the past six months, with older consumers making the biggest cutbacks. At the same time, over half of UK adults are taking action to reduce their debts and 32 percent are increasing their monthly repayments.
But while paying off debts is important, so too is putting money aside, Lloyds points out. It found that one in five Britons have less than £500 in their savings accounts, which could leave them struggling in the event of a financial emergency, while four million consumers have no savings at all.
Ian Larkin, managing director of Lloyds TSB Consumer Banking, said: "It has never been more important to save. Economic conditions are set to become more challenging and a healthy savings balance could prove to be a financial lifeline for some families during the economic storm."
A poll commissioned by Channel 4 revealed that due to problems in the banking industry, 45 percent of savers feel their money is less safe in savings accounts than it was a year ago.
Compare savings accounts via money.co.uk
