Save As You Borrow schemes by credit unions, which encourage people to put aside cash regularly when they take out loans, are turning people into habitual savers, a report has shown.
ABCUL, the credit union association, said the Fairbanking Foundation report showed these products, known as SAYB, turned borrowers into savers, while the Archbishop of Canterbury urged other financial providers to learn from the products.
“Credit unions have long known from experience that encouraging people to save when they take out a loan can have long term transformational effects for creating savers out of borrowers. This report puts hard quantitative evidence behind these powerful effects," said Mark Lyonette, chief executive of ABCUL.
Research by the Fairbanking Foundation carried out by Ipsos Mori showed that 67 per cent of Save as You Borrow users who had no savings, and found it impossible to put money aside, now have plans to save regularly throughout the year as a result of using a Save As You Borrow product.
Archbishop of Canterbury, the Right Reverend Justin Welby, urged other financial organisations to read the report "and consider how they can take a similar approach to benefit their customers and members.”
Financial advisers said that creating a culture of saving for younger people could prove to be difficult.
Philippa Gee, managing director of Philippa Gee Wealth Management, said in many cases a savings habit was only evident in those who had grown up with a savings culture.
She said: “If credit unions can get that started for people, that is great.”
Andrew Whitely, managing director of Provisio Chartered Financial Planners in Letchworth, said while cash saving rates were poor, a good savings habit can lead to a good investment habit, and therefore a growth in wealth.
