Brits continue to use savings accounts despite poor interest rates

Brits continue to save their cash despite the credit crunch and worsening recession, a survey from Fairinvestment.co.uk has revealed. And results from the survey show the average total amount saved per person is £2,813.

Of those with savings, the results showed that a total of 36 per cent of Brits questioned continue to put their money into savings accounts with banks and building societies, despite the fact that interest rates have fallen as low as one per cent in some cases.

Out of the 36 per cent of Brits with money in a savings account, just five per cent keep their cash in a fixed rate savings account, while 14 per cent choose a to save in a regular savings account and 17 per cent opt for a standard savings account.

Cash ISAs are a close second to savings accounts when it comes to Brits' choice of where to keep their money; 26 per cent of Brits choose to stash their cash in the tax-free havens.

Other less popular savings avenues included property (less than 1%), stocks and share ISAs (2.55%), stocks and shares (1.55%) and unit trusts (1.1%) while 10 per cent keep all their cash in their current accounts and five per cent use the old fashioned 'under the bed' approach to saving.

The research also found that just 14 per cent of Brits do not have any savings at all, meaning that the majority of Brits have some degree of financial cushion, despite the recent constriction on family finances.

Commenting on the results, chartered financial planner at Fairinvestment.co.uk, Sharon Bratley, said: "It is encouraging to see that Brits are continuing to save and have some degree of financial back up, especially considering the fact that household bills and living costs are on the up.

"However, savers should watch the rate on their savings account as most have now fallen in line with the Bank of England base rate and some are actually below it."

There are still some great savings account deals to be had though; the Halifax International Regular Saver offers a great rate of six per cent, while instant access accounts are still offering rates above the Bank of England's 1.5 per cent, like the Alliance & Leicester eSaver at 3.6 per cent AER and the Abbey Instant Access account offering a return of 3.5 per cent AER.

Commenting on the popularity of cash ISAs Mrs Bratley added: "Cash ISAs offer great value for money because you can invest up to £3,600 each year tax free. Considering the average amount saved is less than £3,000, cash ISAs make sense, especially because most offer instant access and high interest rates compared to standard savings accounts."