Latest BoE figures reveal a spike in the nation’s savings, with households putting aside £9.1 billion into banks and building societies in August as the pandemic continued to spur people to improve their finances.
This compares to an average net flow of £8.5 billion between April and July this year and also significantly above
pre-pandemic levels, with households paying in an average £4.7 billion in the year to February 2020.
Laura Suter, head of personal finance at AJ Bell, comments: “The nation’s frugal lockdown saving ways have not been dented by being able to go out and spend more, with us all saving £9.1bn in August – almost double the usual savings amount we saw pre-pandemic. However, savers were rewarded with yet another drop in savings rates to yet another historic low.
“With no signs of the Bank of England raising rates and inflation being high, and poised to shift even higher in the coming months, diligent savers are being clobbered from both sides. A mini rates war in some corners of the savings market has improved the best buy rates, meaning there are some options out there for those willing to shop around. And anything is better than leaving it dwindling in your current account earning 0.01% interest – at that rate you’d need £100,000 in savings just to get £10 back each year in interest.”
BoE data shows also that borrowing on credit cards, personal loans and car finance rose slightly in August but remains about a third of what it was pre-pandemic, with the Covid-19 crisis having a significant impact on the nation’s finances and borrowing mentality.
[Main image: robert-bye-unsplash]
