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Average current account balances have increased during lockdown, says bank

Halifax said typical current account balances increased by 11% from the end of February to the end of May.

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Spending on non-essentials shrank by around a third in May compared with a year earlier (PA)

Spending on non-essentials shrank by around a third in May compared with a year earlier (PA)

Spending on non-essentials shrank by around a third in May compared with a year earlier (PA)

Current account customers were holding 11% more in deposits typically at the end of May compared with before the coronavirus lockdown, according to data from a major bank.

Halifax said average current account balances were up by 11% when compared with the end of February.

Despite pay cuts, furloughing and job losses, people may possibly be holding more in their accounts because they are cautious about spending, while they may also have had fewer opportunities to spend as businesses have been closed.

People may also be holding back money that they would have otherwise locked into savings accounts, perhaps because they want to keep their cash where they can access it quickly.

Households appear to be adapting quickly, with balances increasing against a backdrop of falling incomeMartin Turner, Halifax

Halifax said that in May alone, spending on non-essentials shrank by around a third (32%) compared with a year earlier – and much of that has been retained by customers.

Martin Turner, head of current accounts at Halifax said: “The pandemic has created lots of uncertainty in a very short period of time, forcing people to make quick decisions on what to do with their money.

“Households appear to be adapting quickly, with balances increasing against a backdrop of falling income.

“However, we know that not everyone is lucky enough to be in this position. If you feel your future finances are at risk you should contact your bank at the earliest opportunity to get the help and support you need at this challenging time.”

PA