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Monday 22 September 2014

Four in 10 families now saving cash every month

Published 12/08/2014 | 00:00

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More people are saving, which may be a sign of the economic recovery
More people are saving, which may be a sign of the economic recovery

THERE has been a rise in the number of households that are saving money on a regular basis, in what is seen as a sign that the worst is over for the economy.

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Four out of 10 people now say they are putting money aside every month, up from previous months. The rise in the numbers saving regularly was picked up by the latest savings index from Nationwide UK (Ireland) and the Economic and Social Research Institute.

Nationwide managing director Brendan Synnott said more people putting money into banks and credit unions every month was a good sign for the economy. "The increase in the index this month reflects the improvement in the overall economy," he said.

"It appears that people have absorbed the impact of the property tax introduced in 2012 and are now rebuilding their personal finances.

"In normal circumstances approximately four out of 10 people will save regularly. This level had fallen to three out of 10 during 2013 with many people simply being unable to save as they would like to."

The index shows that since January the level of regular saving has gradually improved with figures from July representing a return to the normal and a reversal of a decline which started in autumn 2012.

Some of the best interest rates are being paid for regular saver products.

Nationwide Ireland (UK) pays 4pc on amounts up to €1,000, with KBC Bank paying 3.5pc, with a €1,000 maximum also. Permanent TSB has a 2.7pc rate for regulator savers.

This rates contrast with what is paid for lump sums, which have now declined to below 1pc, according to the latest Central Bank figures.

The figures show that new lump-sum savings accounts being opened by consumers have rates of just 0.65pc, a fall of 0.11pc from the rates being paid a year earlier. Interest eon savings is taxed at 41pc.

More than six out of 10 people believe Government policy discourages saving, the Nationwide UK (Ireland) survey found. Only a quarter think it's a good time to put money away. A sixth said they are happy with the amount they are saving, but more than half still think they should save more.

Discouraged

However, only a quarter believe it is a good time to save, down from 26pc last month and 32pc a year ago.

Elsewhere the proportion of people who say that Government policy discourages saving increased to 66pc in July, from 65pc last month and 57pc a year ago.

"This month's data suggests that personal finances are improving with regular saving increased to normal levels," Mr Synnott added.

"A further positive dynamic is the change in preferred use for spare funds. Preference to pay down debt is declining while more people say they would spend, which may well translate to an increase in elieve it is a good time to save, down from 26pc last month and 32pc a year ago.

Elsewhere the proportion of people who say that Government policy discourages saving increased to 66pc in July, from 65pc last month and 57pc a year ago.

"This month's data suggests that personal finances are improving with regular saving increased to normal levels," Mr Synnott added."

Irish Independent

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