Millions miss out on covering the cost of Christmas | YBS
- Over £360billion[1] is still sitting in UK current and savings accounts earning returns of 1% or less
- There are nearly 13m current accounts[2] held in the UK with a balance of over £5,001, with the average held in those accounts standing at £23,600
- A third (36%) admit they’ll still be paying for this Christmas at this time next year
New research[3] suggests the average person in the UK is planning to spend over £774 this year on all things Christmas, with over half (51%) of all respondents saying they would spend up to £1,000 on things such as gifts, food, decorations and entertaining. Yet Brits could have had their Christmas covered had they moved their savings from a low- or no-interest paying current account. Analysis from Yorkshire Building Society and CACI suggests millions of Brits have missed out on over £1,000 extra income this year.
In January the mutual and CACI shared data that there was £380bn held in accounts paying 1% or less. That figure has reduced, but only by 5% meaning there is still over £362bn sat in low paying accounts.
The analysis also shows that there are still nearly 13 million current accounts held in the UK with balances above £5001, and of those people who hold at least £5,001 in their current account, the average balance held is £23,600.
The picture looks brighter for over 20,000[4] savvy savers who opened a Yorkshire Building Society Christmas Regular Saver in January, who have no need to worry about the cost of their spending. The account, which matured at the end of October, allowed customers to deposit between £1 and £150 per month and has seen average balances build to £1,070 – more than covering the average cost of the festive period.
The research[5] also shows almost a fifth (18%) of people said they would rely on some form of borrowing to cover the cost of Christmas and over a third (36%) said it would take them at least a year to pay the amount borrowed back. Many of the respondents stated “cost-of-living pressures” and “not having sufficient funds to cover the costs” as the main reason for relying on credit, prompting the Society to encourage people to find ways to avoid going into the red to cover the cost.
Chris Irwin, director of savings at Yorkshire Building Society, said: “The cost of Christmas, for many, is growing each year. We started the year highlighting that keeping large amounts of funds in low paying current accounts has become a costly mistake for millions. Despite the attention savings interest rates continue to have, it’s surprising that there continues to be such large pockets of people who are missing out on savings interest which in turn could have easily covered the cost of the festive period for many.
“For those that don’t have savings that could generate additional income, starting a regular saver now would give shoppers a healthy sum to draw on for Christmas next year - without having to rely on credit.
“We don’t want to tell people how to spend their hard-earned money but covering the cost of Christmas, for many, can be quite daunting and stressful. We recognise that many people need help and advice around financial wellbeing, so that they can navigate times when we know people tend to spend more, like the festive season without going into the red. Making some small changes to habits could easily cover the cost of next Christmas.”
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk said: “Consumers debating whether to start a savings pot should act now, it is never too late to overhaul their usual habits and taking just one step can put them back in charge of their financial wellbeing. Building an emergency fund or saving for a specific goal is simple and easy to do, so anyone who has struggled to save this year could kick-start the habit for 2025 and rely less on short-term credit to cover the festivities.
“Savers may find it convenient to stash their cash in their current account, but the stark reality is that these do not work hard enough for them to earn decent interest, nor do they really offer the right structure to instil the savings habit. Consumers need to shake any apathy they have and take a step back to decide how their money could work harder for them.”
Yorkshire Building Society, who commissioned the research through Opinium, hopes people will give some attention to their finances, take steps to review their money situation and increase their potential income.
References
1. £362bn in Rest of Market Current Accounts paying 0.00% to 1.00% and Instant Access non-ISA Savings Accounts paying 0.01% to 1.00%. Source: CACI’s Current Account & Savings Database (CSDB), Rest of Market Stock at Sep 2024
2. 12,607,558 Rest of Market Current Accounts paying 0.00% to 1.00% with balances over £5001. Avg balance in those current accounts that have more than £5001 is £23,683 Source: CACI’s Current Account Database (CSDB), Rest of Market Stock at Feb 2024.
3. Yorkshire Building Society survey carried out with Opinium Research. All survey data collected between 06 September 2024 - 10 September 2024 with a National Representative sample of 2000 adults
4. Yorkshire Building Society data of Christmas Regular saver and e-saver 2024.
5. Yorkshire Building Society survey carried out with Opinium Research. All survey data collected between November 27th to December 5th 2024 with a National Representative sample of 2000 adults
