Brits dip into £6 billion worth of ISA savings

Britons are being forced to use hard earned savings to meet the rising cost of living, according to new research from Abbey Savings. The study found that on average ISA savers have withdrawn £579 each (£6 billion in total), which equates to 26 per cent of the average ISA subscription for 2007/2008.

Almost a third (31 per cent) of those questioned said that it was day-to-day costs which had forced them to make withdrawals while a further 15 per cent specifically cited bills such as mortgage repayments or utility bills as the reason for pulling out their cash.

For a significant number of us it was our spending urges that prompted us to head for our savings. A quarter (26 per cent) said that their ISA money had gone towards a luxury item such as a holiday or car purchase while a further eight per cent said that it was a high street shopping trip which had parted them from their cash.

13 per cent of those questioned had put their money towards helping friends and family with their finances while almost a quarter (24 per cent) said that their savings had to be called upon to for an unanticipated cost such as an emergency home repair.

Reza Attar-Zadeh, Director of Savings and Investments at Abbey: "With the cost of living increasing, a significant number of us are being forced to use our savings to meet the rising costs. You never know when you're going to need to fall back on your savings and in this respect dipping into them to meet bills such as gas bills is no bad thing".

"On the other hand dipping in to your ISA savings could prove costly in the long term. With a Cash ISA allowance of £3,600 per tax year any withdrawals made can not be replaced, so that part of your allowance would be lost forever. If you're saving towards a goal such as home deposit or looking to maximise the amount of cash you have put away for retirement then the advice must be to try and reduce your outgoings rather than dip into your ISA pot."

ISAs are held by 41 per cent of the adult population and is one of the most popular ways to save with only Instant Access Savings Accounts (74 per cent) proving more popular.

Reason for dipping into ISA %

Overall cost of living - 31
Luxury item - 26
Unanticipated cost - 24
Household bills - 15
Financial help for family/friend - 13
High street purchase - 8
Other - 15