It has been reported that factors such as high living costs, households debts, and a drop in income is results in millions of households across the UK being unable to save any money. New research has been carried on to show that around five million households in the UK are failing to save enough money whilst almost 50 percent of them are concerned about their debts.
The report was commissioned by the debt charity the Consumer Credit Counselling Service. Figures that were released by the Financial Inclusion Centre have revealed that around 4.3 million households have no savings at all and over 1 million households with savings of less than £1000.
Many of these households are already at risk of facing problems if there are any unexpected costs that they incur. The Department for Business, Innovation and Skills (BIS) found that around 27 percent of households that had no savings had become reliant on credit for day to day spending on a regular basis compared to 9 percent of those that had savings of between £1000 and £10,000.
The Consumer Credit Counselling Service also revealed that only 5.4 percent of people that sought help from the debt charity had any form of savings in place, and officials from the charity think that the situation could become increasingly worse due to inflation and high living costs. There are also rising concerns that struggling households could turn to high interest borrowing because they cannot get finance in the traditional way.
One official said: ‘Households that are already struggling may find traditional lenders unwilling to provide further credit and are therefore drawn to short-term credit solutions. Individuals turning to short-term loans and credit cards should be wary of the high interest rates that often accompany these products. Overall debt can quickly snowball out of control.’
