Regular savings habit builds best foundation for savers
Savers setting up a regular standing order or Direct Debit into a savings account will be ahead of the game when it comes to building a savings pot, according to data and research from first direct.
New research shows that a quarter (25%) of all UK adults have adopted a regular, automated savings habit, transferring an average of £99 to a savings account each month. And, only 6% of those with a regular savings transfer decide to cancel their payments within the first twelve months, according to first direct Regular Saver Account data, enabling them to amass a substantial nest egg and benefit from strong returns.
Men and those in their 30s are most successful regular savers
Men are most likely to sign up to a regular savings direct debit, with 28% set up with a monthly transfer compared to 23% of women. Men also tend to put a higher amount away, at an average of £130 a month versus £89 saved by women.
While regular savings amounts increase with age (£92 for 21-30 vs £147 for 51-60), those in the 31-40 year old age group are most likely to have a direct debit or standing order savings transfer at 28%, with an average value of £96.
This group also appears to have a lot to keep on top of when it comes to their direct debit finances. The average total amount going out of a current account via direct debit peaks for the 31-40 age group, at £464, compared to the average of £362 across all ages. In addition, 31-40 year olds are least likely of all the age groups to know the total value of all their direct debits (9% don't know) or how many direct debits they have (7%).
Regular savings accounts offer best returns
Fixed rate regular savings accounts currently offer the best interest rates for those saving a set monthly amount and able to lock their money in for a fixed term. The first direct Regular Saver Account, allows customers to save between £25 and £300 each month for a fixed term of twelve months at a market leading AER of 8.00% gross. The average rate for the top 15 products in the market is 3.85%.
The benefits of regular saving are further highlighted by the habits of Regular Saver Account customers. Three quarters (72%) choose to invest the maximum monthly amount of £300 - giving them a £3,756 gross savings pot, including £156 of interest - and only 2% choose pay in the minimum monthly amount.
Bruno Genovese, Head of Savings at first direct commented: "With numerous pressures on our household finances and a lot of payments to juggle and keep on top of, it can be difficult to remember to set aside the money to save, which is why a regular, automated savings habit can be the best habit to get into for those who are able. Once set up, they require minimal effort to manage and are often left to run and run, helping savers to build a substantial savings pot.
"In particular, regular saver accounts with fixed terms and rates are perfect for medium term savers that have a special event or a holiday on the horizon and are able to lock their money away. These accounts provide exceptional returns, as they offer some of the strongest interest rates on the market."