Recession 'has caused more people to use savings accounts'

Saving has become more common in the wake of the recession, an expert has said.

The ongoing effects of the global economic downturn have put the need to place cash in savings accounts such as ISAs or fixed rate bonds into sharper focus for many Britons, an expert in the industry believes.

According to Annie Shaw, editor of online resource Cash Questions, a growing number of people are deciding to protect what they already have in terms of their personal finances, instead of continuing to spend in the wake of the recession.

Ms Shaw explained that the attitude of the majority of consumers towards money has been altered by the slump, as prior to its onset their was a widespread tendency to resort to options such as a credit card in order to fund both emergency purchases and everyday costs.

However, she noted that the tightening of lending criteria by many banks and building societies has resulted in people reassessing this, as they now realise that it is much tougher to access such finance.

Therefore, the expert added, Britons are realising the essential nature of having "abundant money for themselves" storied away in savings accounts, which, she insisted, is "of course a good idea".

"The inclination in a poor economy - we've got a slow economy - is to conserve one's resources. One feels less confident about one's own economic future. You may have less money to spend and be fearful about your job, and therefore your inclination is to save more," Ms Shaw went on to say.

Recently, research by Defaqto suggested that saving is now a more attractive option for people than it was in the past, as accounts like ISAs generally have more competitive rates following the worst aspects of the recession.

The study found that since the Bank of England reduced the base interest rate to 0.5 per cent in March 2009, rates on such deals have generally risen.