Young people get savings savvy as seniors switch

The number of young people who have opened a savings account has doubled over the past six months, according to new research from Birmingham Midshires’ Saving Britain campaign. One in seven young adults aged between 18 and 24 have recently opened a savings account, compared to one in 14 six months ago.

While young adults are more likely than any other age group to have recently opened a savings account, the study also found that the over 55s, more typically savings-savvy, are most likely to have switched their savings to a different provider (8%); a two per cent increase compared to six months ago.

Jason Robinson, director of savings operations at Birmingham Midshires commented on the findings: “With 2007 widely accepted as the year of the saver, the savings market is not only appealing more to new markets - the younger generation - but we are also noting an increase in movement with more savers, particularly older savers - switching accounts to get a better deal. The trend is certainly moving away from inertia as people vote with their feet.”

Befitting with the tech-savvy generation, online is the savings account of choice for more than half (51 per cent) of the under 25s. Making the most of tax benefits, almost one in seven young savers opt for ISAs (15%)

While the over 55s are also turning to the internet (46%) to get the best savings deal, they are more likely than all the other age groups to reap the benefits of fixed rate savings accounts (12%). However, across all demographics, the number of people opening a fixed rate bond over the past three months has fallen.

Jason Robinson continued: “We urge savers to consider the benefits of a balanced savings portfolio, where some money is stored in an easy access account for short-term expenses and in fixed rate accounts which guarantee good rates over the long-term.”

Rachel Thrussell, head of savings at Moneyfacts.co.uk commented: " It’s great news to see more young people enter into the savings market. Starting the savings habit at a young age is a great step to securing a healthy financial future. With some great rates and deals to be found it’s a perfect time for savers to see a fruitful return on their savings.

" It’s also encouraging to see savers being smart and switching to get better deals. Too many accounts pay poor rates of return, so it's good to see savers voting with their feet.”

Other key findings:

Isas are the most popular savings vehicle amongst the 35-44 age group
95 per cent of young people can access their savings account via the internet
Over 55s are least likely to access their savings account by post
More than one in two (51%) Northerners has invested in an online saver - more than any other region