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'Uphill struggle' for savers could put many at risk of debt

By Joel Stanier

13 February2021

Savings If there's one good thing we can take from the financial crisis of the last few years, it's that many people's attitudes towards their finances have improved. Many more of us are putting money aside - which could save us a great deal of hassle in a financial emergency.

But recent research from HSBC has found that only a quarter of us actually managed to increase our savings balance last year - with many of us withdrawing just as much as we saved, if not more.

Overall, 71% of British residents put money into savings in 2011, even though interest rates were low. Only 4% of respondents to the survey said that low interest rates had discouraged them from saving.

However, not everyone achieved their savings goals that year. HSBC splits last year's savers into four categories: those who successfully saved more than they withdrew (25%); those who withdrew as much as they saved, meaning their balance didn't really change (23%); those who withdrew more than they saved, meaning their balance shrank (23%); and those who saved nothing at all (29%).

So while more than a third of those who did save managed to increase their savings, two thirds either saw their savings fall or remain static.

However, this isn't necessarily bad news, says a debt expert at Think Money. "It's important to remember that savings are there to help protect against financial emergencies that could otherwise lead to debt. In these difficult times, you'd expect to see more people dipping into their savings - so the fact that a quarter of people have still increased their savings is a good sign.

"Those who have withdrawn some of their savings in the last year are fortunate to be able to do so. There are many people whose circumstances don't allow them to save much at all, and any financial emergency could leave them with debts they simply couldn't afford to pay.

"We urge anyone with any concerns about debt, or about their finances in general, to get in touch with an expert to talk about how they can improve things."

Image iStockPhotos / Mehmet Hilmi Barcin

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Tags: savings, bank, bank account, money, HSBC, debt, bank, emergency, financial crisis, crisis, saving, saving money

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