Kids out of pocket as Bank of Mum and Dad runs dry
Last updated 09:46, Monday, 21 July 2008
Childrens’ pocket money is the latest casualty of the credit crunch. Two surveys have found parents are withholding cash from their offspring to pay bills and daily essentials.
One in seven of those asked in research for the Chelsea Building Society said they had cashed in savings to pay utility or council tax bills.
Meanwhile a similar proportion have cut their children’s allowance in the last six months, according to AXA.
But there was some cheer with news that lender Abbey is cutting mortgage rates.
A survey of 1,050 UK residents found that 14 per cent of them had used savings to pay for food and 12 per cent had eaten into savings to settle their monthly mortgage or rental payments in the last three months.
More than seven in 10 of those asked expected to spend more on food, gas and electricity, and petrol in the next three months.
The pay-off would come with less spent on gifts and holidays, as well as home improvements and furnishings.
“We are concerned that many people's finances are in real trouble due to the growing pressure of rising costs across so many essential items,” said director of customer services Darren Stevens. About 17 per cent of parents had cut the amount of cash they gave to their children in the last six months, estimated AXA following a poll of 2,050 UK residents.
It said that 17-year-olds were being hit the hardest this summer by parents cutting back on their spending.
“The ‘Bank of Mum and Dad’ has so far been quiet on the issue of how it will deal with the effects of the credit crunch, but now it has come out and shown teenagers have been hit hard,” said Alison Green, of AXA.
But there was better news for some homeowning parents as Abbey announced a second set of cuts in ten days in interest rates on some of its deals.
It is reducing the rates on some of its two and three-year fixed-rate deals for new borrowers by up to 0.15 per cent.
Its two-year fixed-rate deals for those who borrow 75 per cent of their home’s value and pay a £999 arrangement fee now start at 6.34 per cent.
A number of other lenders have trimmed their rates in recent days owing to swap rates - the key to mortgage rates - having eased slightly.
