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Almost half using savings to cover everyday costs – survey

Almost half of people are dipping into their savings – on average three times a month – to cover everyday costs, a survey suggests.

This is despite 61% of people feeling more optimistic about their finances compared to this time last year, with one in three (39%) feeling more pessimistic, according to Compare the Market’s last Household Financial Confidence Tracker.

Three quarters (76%) feel confident about being able to manage and pay their household bills in the coming months.

However, when asked how often people are needing to dip into their monthly savings to afford everyday living costs, 45% admit they do so at least once a month and 21% need to at least once a week.

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Overall, people are having to dip into their savings around three times per month on average, while 27% say they are unable to save anything at all and 25% can save only between £100 and £250 each month.

Some 20% only managed to make the minimum repayment on their most recent credit card bill and less than half (48%) are regularly paying off their credit card balance in full each month.

In order to mitigate the impact of increasing everyday costs, 42% have cut back on buying clothes and 36% on holidays.

Almost half (48%) have had to cut back on eating out.

In terms of summer travel plans, 41% can afford a holiday in the UK, while only one third (34%) are able to head to a European destination – and just 8% can afford to do both.

More than a quarter of people (27%) are having to take on debt including credit cards and buy-now-pay-later plans in order to pay for their holidays this year, the poll suggests.

Andy Hancock, chief growth officer at Compare the Market, said: “It is encouraging that people are seemingly confident about their ability to manage and pay their everyday bills in the summer months ahead, signalling a positive outlook on the consistency and reliability of their financial situations.

“However, our research shows that many people are still struggling to save on a monthly basis, and a significant number are having to rely on those savings each month to pay for everyday bills or lean on credit cards for additional costs such as holidays.

“Credit cards can be a valuable tool for making purchases, such a paying for holidays. However, when taking out a credit card you have to be mindful of not borrowing more than you can afford. It’s worthwhile paying off your credit card balance in full every month to avoid paying interest.”

Censuswide surveyed 2,010 UK adults between May 10-13.