Scots are moving cash into savings, cutting spending and opting for longer mortgage terms, as they brace for a new wave of cost increases this month.
Analysis of TSB customer accounts has shown that savings balances rose by 6% between October 2022 and February 2023, while current account balances fell 4% in the same period.
Fewer customers fell into arrears - a sign that household finances are increasingly resilient - and the number of transactions on credit cards fell by 13%.
Spending via buy-now-pay-later providers also fell 11% over the period and was down 32% from its pre-Christmas peak. The number of people taking out new mortgage applications over 35 years or more doubled, from 7% to 13% year-on-year.
This month, TSB’s latest Money Confidence Barometer survey found that nearly seven in 10 Scots (68%) believe they are worse off than they were a year ago, with just one in 10 considering themselves better off now.
As Scottish households brace for the impact of rising council taxes, phone and broadband bills and the change in energy bill support coming into force this April, the new data reveals that a third of Scots (32%) lack confidence that their household has enough money to cover day-to-day living costs.
A similar proportion (28%) are not confident their household can pay its fixed monthly outgoings, including rent, mortgage, bills and Council Tax.
Nearly half of respondents (46%) also lack confidence that their household would have enough money to pay for unforeseen household expenses.
Just one in five Scots are confident they can save for a comfortable retirement, with more than half (53%) lacking confidence in their ability to do so.
These concerns have seen more than eight in 10 (82%) Scots reducing or stopping spending on non-essential items to help manage household finances.
Scots between the ages of 45 and 54 are the most concerned about their domestic finances, with nearly half (48%) reporting that they feel worried about their household’s financial situation. Those aged 66 to 75 are the most comfortable, with fewer than a quarter (24%) describing themselves as worried about household finances.
The 45 to 54 age group is also the least optimistic about its future financial situation, with less than one in 10 (9%) expecting their household will be better off a year from now, while two thirds (64%) of that demographic believe they will be worse off.
Young Scots are the most optimistic, with more than a third (37%) of 18 to 24 year-olds believing they will be better off 12 months from now.
Of those who expect to be worse off a year from now, three quarters of respondents believe paying more for food shopping and other household bills, including utilities and broadband, will be the most significant contributory factors.
Mark Curran, customer banking director at TSB, commented: “From locking into longer mortgages and reducing spend on credit, Scottish households have taken decisive steps over the last quarter to boost their savings.
“However, this doesn’t come without sacrifices and money worries,“ he added. “While many are feeling more financially resilient, some are struggling to meet day-to-day living costs and our Money Confidence Experts are introducing more ways to help TSB customers manage their money better.”
The data is based on the saving, spending and money management behaviours of TSB customer bank accounts, captured between October 2022 and February 2023.
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