Debt, spending and saving habits have all changed thanks to the Bank of England's new all-time low interest rate, it has been claimed.
Consumers are biting the bullet and adopting more prudent spending habits, due to the historically low Bank of England lending rate.
A Norwich Union poll revealed that savings have been hit by the policy, with people preferring instead to use their income to pay off debts. This is because the 0.5 percent Bank rate - an all-time low in the institution's history - has led to both cheap borrowing rates and low savings account rates.
The insurer revealed that less than half (42 percent) of people are currently saving into some sort of deposit account. Just 28 percent are keeping their savings tax-free by saving into an ISA, with 56 percent saying that they are receiving less interest on their savings than before.
A third (33 percent) also said that paying off debt was more important than saving.
Interest rates have caused 22 percent of people to decrease their mortgage payments and 15 percent to use money saved on accommodation costs to cover other expenses.
Anthony Rafferty, head of investments for Norwich Union said: "It's no surprise that people are feeling the pinch of the recession, yet what is encouraging, is that some people are actually developing sound financial habits as a result."
He added: "Our research shows people are keen to build up savings and pay off their debts wherever possible, both of which are excellent economic practices."
