Abbey Identifies 'ISA Dippers'

Cash-strapped Britons are dipping into their tax-free savings accounts in order to make ends meet, Abbey said today.

According to the savings account provider, an average of £579 was taken out of the accounts over the past financial year. This represents around £6 billion in total, or 26 percent of savings subscriptions.

Financial pressures caused by the credit crunch, along with the rising cost of food and fuel, are thought to be behind the trend. Indeed, when the "dippers" were asked by Abbey why they had taken out the funds, the largest single group (31 percent of the total) said that it was because of their day-to-day living costs.

A further 24 percent said that they had to meet an "unanticipated" cost such as an emergency repair job, while 13 percent were using the money to help out family or friends.

Director of savings and investments at Abbey Reza Attar-Zadeh said: "With the cost of living increasing, a significant number of us are being forced to use our savings to meet the rising costs. You never know when you're going to need to fall back on your savings and in this respect dipping into them to meet bills such as gas bills is no bad thing.

"On the other hand dipping in to your ISA savings could prove costly in the long term. With a cash ISA allowance of £3,600 per tax year any withdrawals made can not be replaced, so that part of your allowance would be lost forever."