British savers are losing confidence in their financial institutions according to new research from NerdWallet. The financial comparison website conducted a survey of more than 2,000 UK adults which revealed how they plan to manage their finances in 2021 in light of Brexit, COVID-19 and the threat of negative interest rates.
The results found that on average, UK adults in the UK have around £15,157 in savings.
However, 38 percent revealed they had been saving less since interest rates dropped to 0.1 percent in March 2020, with 23 percent prompted to spend more in light of the changes.
Additionally, 18 percent detailed they did not feel their money was secure in a bank, with nearly half (47 percent) planning to withdraw part or all of their money from savings accounts should negative interest rates be introduced.
NerdWallet’s research suggested other external factors are impacting savers’ confidence, with Brexit and coronavirus halting long-term plans.
On the flipside of this, 33 percent of respondents pledged to spend more in the coming months in a bid to help businesses and the wider economy recover in a post-coronavirus world.
Throughout 2020, the majority (52 percent) of respondents had been actively searching for a savings account that offers a better interest rate than their existing one but with the Bank of England keeping the Base Rate at 0.1 percent, that may be easier said than done.
John Ellmore, the UK director of NerdWallet, commented on these findings: “2020 was the most economically turbulent year in recent memory, with Brexit uncertainty, COVID-19 and record-low interest rates all placing substantial strain on people’s finances.
“It is therefore unsurprising that so many UK adults are feeling anxious about the value of their savings.
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“In the current climate, and with more economic volatility inevitable in 2021, it is understandable that people may be worried about the value of their savings – but they must not rush into rash decisions.
“Instead, savers should take their time to explore the various options available to them.
“From savings accounts offering relatively generous interest rates, to alternative savings options such as ISAs and pension schemes, there are products to suit every individual – it is just a question of conducting thorough research and seeking advice where necessary.”
This week, the Bank of England decided to keep the Base Rate at 0.1 percent and within the Monetary Policy Committee’s meeting minutes, it was revealed that there are plans for regulators to urge retail banks to get ready for potential negative interest rate introduction within the next six months.
This news may worry savers further but Mr Ellmore went on to call for a sense of calm: “It is vital that savers don’t panic.
“This can lead people to make rash decisions, which could cause irreversible damage to their long-term financial prospects.
“Instead, individuals should dedicate time to reviewing their savings strategy, and adjusting it to suit their financial goals.
“There are plenty of options to explore. Stocks and shares ISAs, for example, could be a viable savings option for Britons with a greater appetite for risk.
“Alternatively, more risk-averse savers could consider searching the market for savings accounts that offer more generous returns on savings – some fixed-rate accounts can offer up to 1.25 percent in interest, while some instant access savings accounts could offer up to 0.6 percent.
“This is a challenging time for savers.
“That said, there are different savings and investment options available, and the key is committing to conducting thorough research.
“Doing so will ensure that savers can adjust their savings plans to suit their requirements even under the current circumstances, and save for the future with confidence.”
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