• The savings rate grew at the slowest level in more than 11 years, since records began
• UK owes £44bn in credit card debt and £37bn in personal loans
Laura Suter, personal finance analyst at investment platform AJ Bell, comments:
“As a nation we saved at the slowest rate in more than 11 years in October, since UK Finance’s records began. The annual growth in personal deposits rose by a sluggish 0.8% last month, compared to a 2% rise in the same month last year and a near 5% rise two years ago.
“The amount we’re all saving has been consistently falling throughout this year, as households have seen their wages fail to keep pace with inflation for much of the past decade. Brits saved less, but we continue to be a nation addicted to debt – with credit card borrowing growing 5.7% in the past year to October, while consumer credit in general grew by 4%.
“In October alone we borrowed £11.3bn on credit cards, a more than 12% increase on the same month last year. The borrowing figures highlight two groups of people, those that are managing their debt and those that rely on it to get by each month.
“A number of households are in control of this borrowing, and are paying off their credit card debt in full each month. This shows a shift for some to using a credit card for all of their purchases each month, in order to generate points or get cashback, and then paying off the debt immediately.
“However, there is still £44bn owed by Brits on credit cards, another £37bn in personal loans and £6.5bn outstanding in overdraft borrowing. The UK’s savings problem is highlighted by the fact that the household savings ratio is near record lows, at just 3.9%, marking the fourth lowest figure since records began in 1963, according to the Office for National Statistics.
“As wage growth has recently hit a near-10-year high and is higher than inflation, we would hope to see the rate at which people are saving start to pick up, while others will use it an opportunity to pay off their costly debt.”