Lower income families 'need more incentive to use savings accounts'

People need to be given greater incentive to use savings accounts, it has been suggested.

A greater culture of encouraging the use of savings accounts such as ISAs is required among Britons, particularly those on lower salaries.

That is according to Mark Bower, managing director at online resource Money Maxim, who has said that such people may need more assistance from the government if they are to access the best ISA rates available to them in the aftermath of the global economic downturn.

It has emerged recently that the Conservative-Liberal Democrat alliance may be considering the possibility of abolishing ISAs and launching a replacement called the Lifetime Bonus Savings Account in order to increase the number of people on lower wages who save.

This was recommended in a recent paper published by the Institute for Public Policy Research (ippr) and Mr Bower explained such a measure would "make sense" for lower income families, as it would enable them to use their money for both "specific purchase savings - such as a holiday or Christmas - as well as longer term savings".

Furthermore, the Money Maxim official stated there is a "real need" to help these people build a "reasonable savings pot of, say, three months' income", as well as "the carrot of a ten per cent bonus" to help them resist any temptation to dip into their funds set aside "on a whim".

However, he added it is unlikely the administration will want to "rock the boat" with established savers who may already feel hard done by "after a lengthy period of lower interest rates" by removing the ISA.

Recently, author of the Money Hunny blog insisted there is now a much larger appetite among Britons to save in the wake of the recession, particularly younger people.

Jasmine Birtles of Money Magpie ageed: "Those who can are actually saving more because it has hit home for them that they need to,".