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Rising holiday costs see savings raided

17th July 2014 Print

Savers are withdrawing, on average, over double the amount that is being paid in to their savings account, as the cost of paying for summer holidays takes its toll, says the latest research from Halifax.

In the three months to July, savers raided their accounts to the tune of an average of £1,666. At the same time, the average amount deposited in savings over the same period was less than half that amount, at £803. As a result, the amount being raided in the three months to July was higher than that deposited in savings over the same period
 
The top reason given for raiding the piggy bank was to pay for a holiday or weekend break. Almost one in five (19%) raiders cited this as their excuse. Recent research from Halifax[i] shows the average overseas holiday now costs £1,404 per person[ii]. This represents an inflation busting[iii] 7% increase in the last year.
 
Additional reasons include:

Emergency home/car repairs (16%)
Lent to family/friends (11%)
Impulse gifts/luxury shopping (10%)
Unexpected bills (10%)
Overspending on current account (10%)
 
The number of savers unexpectedly raiding their account in the past three months increased slightly (2%) from the same time last year, to 37%. However, while the amount they are withdrawing (£1,665) has risen 8% since January, it is 9% lower than the same time last year (£1,825).
 
Although savings accounts have been raided in the past three months, the number of consumers that are saving money has also increased since last summer.
 
This time last year only two thirds (68%) of respondents said they had set money aside in the past three months compared with almost three quarters (73%) in July this year. However, the average amount saved has decreased by 3% year on year, from £829 in July 2013 to just over £800 now.
 
The top five things people are currently saving for are:

Nothing specific (31%) or a rainy day (33%)
Holiday (26%)
Retirement (19%)
House deposit (11%)
Car (9%)
 
Richard Fearon, Head of Halifax Savings, says: “Summer is typically a time when we see people dipping into their savings, as the cost of holidays put additional pressures on every day finances. While many have specifically saved for their holiday over the year, it seems that they may also be underestimating the cost. As a result, the nation’s savings pots have been unexpectedly raided to make up the shortfall.
 
“However, the fact that a greater number of people are saving, and regularly putting money aside, is encouraging, and means that they are likely to be better able to cope financially when those unexpected costs arise.”
 
Regional Raiders
 
Londoners saved the most money (£1164.16) in the three months to July, but they also raided the most (£2306.44). The east of England had the greatest proportion of savers, with four in five people (83%) setting aside money in the past three months. However, the East Midlands had the lowest proportion of savers at 60%.