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Flight to safety takes off for savers

02 April 2019
  • More than half of adults are considering increasing their savings this year
  • But savers are split on choosing fixed rates or easy access accounts
  • People’s key financial concern for the year is the rising of living costs

Rising uncertainty is driving a financial flight to safety as savers look for security in the face of worries about living costs, reveals new research from Charter Savings Bank1.

Its study shows that more than half of adults (53%) have either started to or are considering saving more than in previous years. And it’s 18-30-year olds (71%) who are the most likely to be saving more, whilst 38% of over-75s are also looking to save more than before.

Just over a quarter (28%) of British citizens are thinking of cashing in investments such as shares and bonds as they look to reduce risk, with more people turning to fixed-rate savings accounts.

Around 44% say they are considering fixed-rate accounts, whilst 38% are willing to sacrifice higher rates for easy access.

Younger savers aged between 18 and 30 are the most likely to open fixed-rate accounts with 55% looking to lock in rates, although 49% are considering easy access accounts and 56% are considering opening a range of savings accounts to have a balance between the two. However, 43% of all adults are looking to increase their savings in a wider mix of accounts to maximise returns and flexibility.

Charter Savings Bank’s Mix & Match ISA could provide such flexibility for savers, enabling them to split their £20,000 ISA allowance across multiple accounts with competitive rates, so they don’t have to choose one type of account over another – they can have the best of multiple worlds.

They can, for example, open an Easy Access Cash ISA with £5,000 and then deposit £10,000 in a 1 Year Fixed Rate Cash ISA product. If they have more money available, they could open a third Cash ISA product using the remaining £5,000 of their annual allowance.

With living costs and economic and political uncertainty all on the rise, more than one in five adults (22%) have been left feeling pessimistic about their finances for the year ahead, and more than one in ten (11%) of 51-60 year olds say they are considering pushing back their retirement date.

It’s day-to-day costs which are worrying people the most, with nearly three quarters of adults naming rising energy bills (73%) or rising food costs (72%) as a financial concern for the year ahead.

However, rising political uncertainty is the primary financial concern for young people, with over three quarters of 18-30-year olds (77%) worried about what political changes in 2019 might mean for their finances.

People’s biggest financial concerns for 2019

Financial concerns How many are worried about this?

Rising energy bills

73%

Rising food costs

72%

Political uncertainty

66%

Rising inflation

63%

Economic uncertainty

61%

Interest rate rises

43%

Currency markets

38%

House prices

34%

Stock market volatility

33%

Paul Whitlock, Executive Director, Charter Savings Bank says: “Uncertainty seems to be a way of life currently, with political and economic concerns rising in tandem with living costs.

“It’s reassuring to see so many people, particularly young people, taking their savings seriously in such a volatile climate. With even small amounts of money growing over time, saving from an early age is a great way to ensure financial resilience.

“Though savers are increasingly looking for safety, it can be difficult to decide on the right home for your cash and whether to lock in rates or opt for the flexibility of easy access.”

1 Opinium conducted research among 2,004 adults living in the UK on behalf of Charter Savings Bank between 5th – 7th March 2019

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Home truths for adult children and parents

27 February 2019
  • Nearly half of young adults living at home keep quiet about their savings and debts
  • Just over half of parents charge rent, and the average rent is just £161 a month
  • But most parents and adult children are open about their finances

With the number of adult children sharing the family home with parents at an all-time high, new research from Charter Savings Bank1 shows they are not always quite so good about sharing details on their finances.

The nationwide study found nearly 69% of parents are open about their finances with their adult children and a further 21% would be happy to discuss money with their adult children, but are never asked. Adult children mainly reciprocate with 69% saying their parents know how much they earn.

But when it comes to debts and savings the 26%2 of 20 to 34-year-olds who live with parents – around 3.4 million people – are not as forthcoming. Nearly half (45%) have either debts, savings accounts or both, which their parents are unaware of.

Nearly one in five (18%) have both savings accounts and debts their parents do not know about, while some have secret savings accounts (15%) and others have secret debts (12%).

Adult children living at home are on a good deal, the research shows. Nearly half (47%) of parents do not charge rent for living with them, and the average rent charged by those who do is just £161 a month – a significant saving on average private sector rents.

This reduction in rent is highly beneficial to young adults, as three in ten (30%) admit they would not be able to save for a home if they did not live with their parents. It can, however, be difficult agreeing how much to contribute towards living costs between parents and their adult children, and there are vast differences between families.

Some parents ask for contributions towards food (31%), energy bills (23%), phone and broadband (17%), for example, but a third (33%) do not ask for any contributions at all.

This is at odds with what their children believe they are contributing towards, with 85% believing they put money towards food bills, and a high proportion saying they help parents towards TV and entertainment subscriptions (67%), maintenance (66%) and energy bills (62%).

What parents and adult children say

Bill Percentage of parents who ask for contributions from adult children Percentage of adult children who believe they contribute

Food

31%

85%

Energy bills

23%

62%

Phone/broadband

17%

60%

TV or entertainment subscription

15%

67%

Council tax

13%

49%

Other utilities

8%

61%

Insurance

5%

55%

Maintenance

4%

66%

Car costs/petrol

3%

60%

The study found that, on the whole, children are honest with their parents about general spending, although sometimes this is only because they are asked directly. Just over a third (35%) openly tell their parents how much they spend on gym or health club memberships, and a further 52% would do if asked.

The aspect of their spending that adult children are least forthcoming about with their parents is transport costs, with a sixth (15%) admitting they wouldn’t tell their parents how much they spend on their car, or taxis and Ubers.

Paul Whitlock, Executive Director, Charter Savings Bank, said: “Keeping debt a secret from close family may be tempting, but a problem shared can be a problem halved, as discussing finances may help alleviate stress.

“While living at home, young people have a fantastic opportunity to work towards clearing debt and start saving towards their goals, whether that be buying a property, travelling or further education.

“Saving as much as possible from an early age is a great habit to get into; even a small amount will soon grow. It also means people are used to setting aside some of their income each month, which is good practice for when they move out of the family home.”

1 Opinium conducted research among 2,011 adults living in the UK on behalf of Charter Savings Bank between 22nd – 25th January 2019
2 https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2017

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Savers are keeping it in the family

07 February 2019
  • One in four are borrowing cash from their nearest and dearest
  • The average amount lent adds up to nearly £1,100
  • And only half always pay the money back

As everyone feels the January pinch on finances, new research from Charter Savings Bank1 reveals many will be relying on family and friends to tide them over. Its nationwide study found that one in four (25%) adults have borrowed from their loved ones in the past year.

The handouts from family and friends are not trivial – the average amount borrowed adds up to £1,093 in the past year. And the money is not always repaid – just 54% of those who borrow cash say they always pay it back.

A quarter (25%) of those who rely on others’ generosity try to pay it back most of the time and 10% say they occasionally pay it back, but 4% admit they never pay it back. Women are better than men at paying cash back – 58% say they always repay family handouts, compared with 49% of men.

Partners and spouses are the most likely to be asked for a loan – 22% of those who borrow say they ask their partner or spouse for cash at least once a month. Around 65% of those who borrow from their partner ask them for cash at least a couple of times a year.

Over a third (36%) of those who ask for money from friends and family borrow from their parents at least twice a year – and it is 18-34-year-olds who are most likely to borrow from them, with 11% saying they ask for money at least once a month.

The study found regional differences in the amount of savings borrowed from our nearest and dearest. Those in the South East are the most likely to borrow money – averaging £1,873 borrowed each year, with those in the East of England least likely to – averaging just £445 borrowed each year.

The research found that of all adults who have asked for money from family at some point – 30% have asked parents and 14% have asked partners or spouses, while a further 8% have asked friends.

Paul Whitlock, Executive Director, Charter Savings Bank, said: “The rising cost of living and squeezed family incomes, particularly at this time of year, can mean that many are increasingly leaning on friends and family to come to their financial rescue.

“In many cases our loved ones are happy to help-out financially, but that can come at a cost, particularly if the recipient isn’t able to pay it back.

“There are many different ways to save; even setting aside what may seem like an insignificant amount each month will see your savings pot grow. Starting a regular savings habit at the beginning of the year will set you in good stead to reach your savings goals for 2019 and leave you less reliant on raiding the savings of others.”

1Opinium conducted research among 2,007 adults living in the UK on behalf of Charter Savings Bank between 20th – 22nd November 2018

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Savings raiders end up ahead

17 December 2018
  • One in eight savers raid their accounts every month, with only one in five always replacing the cash they take out
  • But savers still end up ahead for the year with average deposits of £2,906 beating average withdrawals of £924
  • Big ticket items like cars or holidays are primary motivators for driving saving behaviour

New research from Charter Savings Bank1 reveals that one in eight (12%) regular savers usually take money out of their accounts every month – and the number of savings raiders is set to grow as festive spending puts finances under strain.

Despite their best intentions, 12% of savers – the equivalent of six million people across the UK – dip into their savings every month, and over two thirds of adults (72%) say they make a withdrawal from their saving accounts at some point during the year.

Over the course of a year, savers estimate they withdraw about a third (32%) of their cash, although one in five (21%) admit to taking out at least half of their total savings. Just one in eleven (9%) say they never touch their savings.

But while we are almost all savings raiders to some extent, the study found we do at least try to put the money back. Just one in five (18%) of those who take cash out of their savings pot always replace it, while 43% try to do so. Around 15 per cent admit they replace cash rarely at best.

The average amount saved over a year is £2,906 and the average amount withdrawn over this time is £924. Men are able to save more over a year than women (£3,344 compared to £2,476), and just over a fifth (21%) of men will always replace their savings compared to one in six (16%) of women.

Charter Savings Bank’s study found interesting differences in the reasons driving people to withdraw money from their savings, with some only doing so when they need cash for a big-ticket item like a holiday or car (30%), while others say they mainly take money out when they need it for unexpected bills (27%) or in an emergency (25%).

Main reasons people raid their savings

Event Percentage of people who take out savings due to this reason

When I need money for a big-ticket item like a holiday or car

30%

Whenever I have unexpected bills like home or car repairs

27%

Only in an emergency

25%

Usually each month when I run out of money

12%

When I have reached my savings goal

6%

Paul Whitlock, Director of Savings, Charter Savings Bank, said: “There are many different types of savers in the UK and there is no right or wrong way to save. Anyone able to set aside some money each month, whether they are saving up for a specific item or just in case of emergency, is doing well.

“Saving as much as you can afford to is extremely worthwhile. It may seem pointless putting small amounts of money aside but it is extremely satisfying to see your savings grow. Christmas is an expensive time of year but a good time to start thinking about your savings goals for 2019.”

1 Opinium conducted research among 2,007 adults living in the UK on behalf of Charter Savings Bank between 20th – 22nd November 2018

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Your 30s are your savings peak

19 November 2018
  • Thirtysomethings are the most disciplined savers, putting away nearly 60% of their disposable income per month
  • And it’s older generations who are the big spenders, saving just over a third of their income
  • But more than one in 10 have never opened a savings account, rising to one in five in their 20s

Click here to view.

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UK Grandparents worth £5 trillion

27 September 2018
  • Grandparents’ total net worth adds up to £5 trillion or £350,634 each
  • Majority of grandparents say their kids will be better off than them when they reach the same age
  • Grandparents hold an average of £29,725 in bank and savings accounts

New research from Charter Savings Bank1 shows grandparents are collectively worth over £5 trillion – the equivalent of £350,634 each – and expect their children and grandchildren to be as well off as them when they reach the same age.

Despite owing much of their wealth to being part of the property-owning generation the study found 52% of grandparents believe that their children will accumulate more wealth than them compared to a quarter (25%) who think the younger generation will be worse off.

Grandparents acknowledge that they are worth more now than their parents were at the same age; over half (56 per cent) believe this to be the case versus a quarter (25%) who think they’re worth less now than their parents.

In a sign of how many pensioners are sharing their money with younger generations during their lifetimes, four in ten (40%) grandparents are either already gifting cash to their children and grandchildren or plan to do so. Three-quarters (74%) and half (50%) of grandparents plan to pass down their wealth to their children and grandchildren respectively.

The main source of grandparents’ wealth is their home worth an average of £225,623 which accounts for almost two-thirds (64%) of the value of their assets. Their pension pots (£32,652), investments (£32,013) and bank savings (£29,725) are the other major sources of wealth.

Grandparents are not entirely debt-free – around one in five (19%) still have mortgages on their main home and one in three (32%) owe money on loans and credit cards. On average, they have £14,810 in liabilities predominately due to outstanding mortgages of £11,130 with £2,211 in unsecured debt through loans and credit cards.

Paul Whitlock, Director of Savings, Charter Savings Bank, said: “Baby boomers may be the richest generation ever, but they are optimistic that their families will in time be better off than them. This may be difficult to believe for millennials struggling to reach the property ladder but much of their grandparents’ wealth will eventually find its way to them either through gifting or inheritance.

“While houses are the biggest source of wealth, the savings accumulated by the average grandparent almost match the size of their pensions and investments, demonstrating the role that a healthy savings habit plays in any balanced portfolio.

“Whether you are lucky enough to be expecting to inherit all or part of your parents or grandparent’s wealth or not, it’s important for people of all ages to make regular cash savings and seek out the best rates to live the lifestyle you aspire to have in later life.”

1 Opinium conducted research among 2,007 adults living in the UK on behalf of Charter Savings Bank between 22nd – 26th June 2018

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Financial Services Compensation Scheme

Financial Services Compensation Scheme

Your eligible deposits with Charter Savings Bank are protected up to a total of £85,000 by the Financial Services Compensation Scheme, the UK's deposit protection scheme. Any deposits you hold above the limit are unlikely to be covered. Please click here for further information or visit www.fscs.org.uk.