Britons put aside just three percent of income into savings as living costs surge | Personal Finance | Finance newsbhunt


Britons put aside just three percent of their disposable income into savings with the average household putting £734 a year into savings.

Research by City Index comparing several countries found the UK has an average household income of £22,558 but Britons are only investing 3.25 percent of this into their savings, at £734 a year, or £61 a month.

The study looked at 35 countries to compare the average household’s savings as a proportion of disposable income, compared with long-term interest rates, to create an overall savings score.

The UK ranked 17th overall, with three percent long-term interest rates. People in the UK have a similar income to Sweden but Swedes put aside 10 percent of their income into their savings, with the Scandinavian country ranked 10th.

The top spot was taken by Switzerland, where people have disposable income of $35,311 (£28,205) and put aside 17 percent of their earnings, or $5,908 (£4,719), into their savings. This is despite the Swiss having very low interest rates, at 1.44 percent.

Luxembourg came in second place, where people put aside eight percent of their $40,395 (£32,266) income, with interest rates at 2.35 percent.

The USA came in third place, with the highest income of all coutries compared, at $42,592 (£34,020). Americans save seven percent of their income and get interest rates at 3.21 percent, earning them third place overall.

The fourth top saving country was Chile, which had the lowest disposable income, at $14,004 (£11,186), but people put aside 11 percent of this into their savings, or $1,532 (£1,224). Chile had the highest long-term interest rates, at 5.19 percent.

This is almost £500 more than Britons put aside, despite having £10,000 more a year in disposable income to work with.

The base interest rate was held in the Bank of England’s latest decision at 5.25 percent, after climbing consistently for over a year and a half.

With inflation in the UK falling to 4.7 percent in the latest figures, the top-paying savings accounts are now beating inflation, with several fixed rate and easy access accounts at rates above five percent.

Lucinda O’Brien, savings expert at Money.co.uk, said: “For the first time in two years, savings rates are beating inflation.

“This is fantastic news for savers, but these top rates might not be around for long as we’ve already seen fixed-rate bonds drop below six percent in recent weeks.

“Currently, Metro Bank is offering the top rate for an instant access account at a very attractive 5.22 percent, closely followed by Cynergy Bank’s easy access account at 5.15 percent.

“Metro Bank is also offering the top rate for a one-year fixed-rate account at 5.91 percent, which would be a very competitive rate to lock in for 12 months as the savings market is changing every day.

“Alternatively, if you can lock away your money for even longer, JN Bank has a four-year and five-year fixed-rate account at 5.50 percent. Watch this space to see how long these rates last.”

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