All Policies Include Coronavirus Cover

Coronavirus FAQs

Questions about cover for coronavirus? Read our FAQs and find out what our policies can do for you. If you would like to contact us, please note we are currently only available 09:00 to 17:30 Monday to Friday due to reduced operational capacity. Thank you.

Holidays 'most popular savings goal'

25 February 2016 08:05

Holidays get Britons saving, research shows

Holidays get Britons saving, research shows

Dreams of holidaying in the sun get Britons saving like nothing else can, the results of a new study suggest.

More than one in four (26%) of those surveyed for Nationwide Building Society say they save up so they can go on holiday - with travel insurance potentially among the associated costs.

That makes holidays the biggest motivation for saving, ahead of Christmas (15%) and putting money away for a rainy day (15%), a new car (9%), or a deposit on a house (8%).

Popular saving tools

The survey also suggests that people's holiday funds are much likelier to be built up in current accounts than traditional savings products such as Isas.

Some 45% of those questioned say they use a current account for their savings. That compares to 25% who choose a taxable savings account for their nest egg and 34% who opt for a cash Isa.

Just 5%, meanwhile, use stocks and shares Isas to grow their savings.

The typical cash Isa is now offering an interest rate of 1.38%, financial information website Moneyfacts says.

But many current accounts offer rates that compare favourably with savings accounts, as well as offering cash-back deals.

Saving reforms

Although Isas currently have tax advantages, f rom April 6 many people saving up for a holiday - or anything else - will have a new personal savings allowance that will mean they no longer have to pay tax on the interest they get from other accounts.

People paying tax at the basic 20% rate will be able to earn as much as £1,000 in interest on their savings without having to pay tax on it.

Higher rate taxpayers paying 40%, meanwhile, will be able to claim up to £500 tax-free. Those paying the additional 45% tax rate will not be entitled to a personal savings allowance, however.