Rising savings balances and reduced credit use signal increasing financial resilience across UK households

• Savings balances rose 6% between October 2022 and February 2023 as British households brace for a new wave of cost increases
• Cautious Brits scaled back spend on credit cards, with eating out, holidays and socialising taking the biggest hits
• Confidence in household finances improved over the period, alongside signs of growing financial resilience

Brits are moving cash into savings, cutting spending and locking into longer mortgage terms as they brace for a new wave of cost increases in April, new TSB bank account data finds.

Savings balances rose 6% while current account balances fell 4% in the period, as Brits moved cash into savings. The number of people who took out new mortgage applications over 35 or more years doubled from 7% to 13% year-on-year.

The data from TSB bank customers and a nationally representative poll of 2,000 UK adults, comes as UK households brace for the impact of rising Council Tax, phone and broadband bills and the change in energy bill support coming into force this April.

Over the period, cautious Brits scaled back spend on credit with fewer falling into arrears, a sign that household finances are increasingly resilient:

• The number of transactions on credit cards fell 13% between October 2022 and February 2023. 
• End of month credit card balances fell 0.5% between October 2022 and February 2023.
• Spend through ‘Buy Now Pay Later’ providers also fell 11% over the period and was down 32% since its Christmas 2022 peak.
• The cash value of credit card withdrawals at ATMs also fell 8% in the period.

However, greater financial resilience comes with short-term costs as more than three-quarters (79%) of Brits say they have reduced, stopped or delayed spending on non-essentials to help manage their household finances. Among the most common items Brits have cut back on:

• Eating out or getting takeaways – 48%
• Holidays (both in the UK and abroad) – 37%
• Leisure activities (such as socialising, days out, etc) – 32%

Despite financial sacrifices and rising costs, Brits are feeling increasingly confident about their household finances, with the average TSB Money Confidence Barometer Score* rising from 5.6 to 6 this quarter compared to last October.

While nearly half (46%) of Brits believe that their household will be worse off financially in 12 months’ time compared to now, this data marks an improvement from the 6 in 10 (62%) who said they are less well-off now compared to last year.

However, money worries continue to be front of mind for many households despite improving confidence. While more than a quarter (28%) of Brits say they feel ‘in control’ of their household finances, a similar number say they feel ‘worried’ (31%).

Of those who said they believe their household finances will be worse off in 12 months’ time, rising household bills (75%), paying more for food shopping (75%) and fuel and travel (57%) are the leading reasons.

Mark Curran, Customer Banking Director at TSB commented:

“From locking into longer mortgages and reducing spend on credit, British households have taken decisive steps over the last quarter to boost their savings. It’s encouraging to see Money Confidence move in the right direction.

“However, this doesn’t come without sacrifices and money worries. 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.”

To help reduce the nation’s money worries and improve money confidence among those hardest-hit by the cost-of-living crisis, TSB is today announcing new support, including:

• Lightning Reach, a free one-stop online portal, that identifies and provides access to financial support such as benefits, grants and local discretionary funds – uniquely matched to individuals. Customers can register to see a range of support they may be eligible for in one place and easily apply for multiple types of support directly through the portal.  Lightning Reach can now be accessed on TSB’s Money Worries web page
• Seven-days-a-week video-call service with TSB Money Confidence Experts to help customers manage debt and budget; review their finances to help pay important bills; and help with everyday banking tasks like online banking. Appointments can be made on TSB’s website.