Consumers Not Making Full Use Of Isas Research Shows
Significant numbers of Britons are not making best use of tax-free savings ahead of the end of the current financial year, new research reveals.
In a study carried out by Nationwide it was revealed that just over a quarter (28 per cent) of those with an individual savings account (Isa) claim to not have enough money to allow them to invest into such a financial product. Meanwhile, some 58 per cent state that they would like to put more cash into the tax-free savings scheme but currently cannot afford to do so. On the other hand, one in ten do not want to save any more cash into their Isa, with the firm suggesting that this may be because such people feel they are already putting an adequate level of money aside.
Furthermore, it was revealed that 30 per cent of Isa consumers have put less than 1,000 pounds into their tax-free savings vehicle, with 10 per cent investing between 1,000 and 2,000 pounds. Just eight per cent of respondents were shown to have put over 3,000 pounds into their stock and share-based Isas.
Due to a failure of making effective savings, it may be that consumers find that their ability to manage money comes under strain later on in life. By not making the best use of setting cash aside, it could be possible that people develop problems in meeting financial demands, such as personal loan repayments, property repairs and moving costs, when they get older.
The study also indicated that there is some misunderstanding in regards to Isas. Four out of 100 people questioned claimed to be unaware as to how much they had topped up their savings schemes by. Meanwhile, nine per cent of respondents reported that they do not save more money into their Isa because they “prefer to keep their savings in an instant access account”. However, the financial services provider warned that this is despite the fact that all Isas offer instant access to money.
Commenting on the findings, Matthew Carter, director for savings at Nationwide, said: “With just over a week to go before the new Isa limits come into force, work needs to be done to encourage people to make the most of their Isa allowance. With one in ten Isa holders opting to save in a regular savings account instead of their Isa, it’s essential that consumers are educated about the benefits of tax-efficient savings and how most Isas allow instant withdrawals. Nationwide calls on all would-be savers to make use of their Isa allowance - with only a week to go until the end of the tax year, now is the perfect time to start saving.”
People concerned about their ability to put money into an Isa or any type of savings product might wish to consider getting a loan. Although this represents another source of financial demand, by using a loan as a means of debt consolidation consumers may be able to merge numerous constraints on their spending into a single monthly repayment. This may leave them with more disposable income, money which could then be invested into a savings account. A debt consolidation loan might be of particular help to women wishing to sort out spending. A recent Legal & General study showed that the number of females claiming they are looking to spend fell from 40 per cent down to 20 per cent from November 2007 to January 2008.
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