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Home Lifestyle Plum users shun non-essentials as cost-of-living crisis bites

Plum users shun non-essentials as cost-of-living crisis bites

- Investing and savings app hikes savings account rates

by Staff GBAF Publications Ltd
  • Analysis of 500,000 Plum users reveals spending slashed on non-essentials such as  entertainment, dining out and groceries to better cope with cost-of-living crisis • Spending on essentials such as energy bills and fuel up by 27% and 9% respectively • Plum savings account rate increases to 1.01% for subscribers, 0.50% AER for basic tier account users

Wednesday 11 May 2022. Plum users are slashing their spending on key non-essential areas  as they tighten their belts amid the rising cost of living – with the business moving to  increase its savings account rates to further help users.

Plum’s customer spending data shows a clear pattern of immediate cost-cutting. The latest  spending and saving data of 500,000 Plum users shows personal care spending is down  22.5% month-on-month while health and fitness is down 15.5% and entertainment spending  15.1%.

Spending on home entertainment such as TV subscriptions is down 11.8% while groceries  and dining out have decreased 8.8% and 6.4% respectively.

With regards to essential spending, energy bill costs have rocketed month-on-month thanks  to the energy price cap hike, with the average spend increasing 26.9%. The amount spent on  fuel has risen 9.4% in April alone.

Following the hike of the Bank of England base rate and to help people make the most of  their finances, savings rates have been increased for Plum users.

Customers who subscribe to Plus, Pro or Ultra tiers (starting at £1 per month) can earn the  best interest rate of 1.01% AER (up from 0.40% AER) on the firm’s Easy Access Interest Pockets. The rate for customers using the Basic tier has increased to 0.50% AER, up from  0.25% AER.

These are protected by the Financial Services Compensation Scheme (FSCS) and are  provided by Investec Bank Plc.

Victor Trokoudes, CEO and co-founder of Plum, comments: “The cost-of-living crisis is  really beginning to bite households, and this is unfortunately reflected in our in-house user  spending data.

“People are cutting back on non-essential spending and this is shifting directly into essential  categories such as energy and fuel. This is tough for households, but it will also begin to  reflect in the wider economy as businesses feel the effects of this reduced spending.

“Personal care and health and fitness and entertainment have seen the biggest cutbacks,  with groceries and dining out not far behind. With energy bills unlikely to come down for

the foreseeable future, we expect this trend to remain steady as households adjust to a  difficult new normal.”

On the recent Plum rates rise, Victor adds: “We’ve raised our savings rates in line with the  Bank of England base rate hikes to pass on the benefit to our customers.

“Alongside our newly-launched stock investing offering, Plum users now have access to a  wide range of personal finance products to help them make their money go further.

“While the cost-of-living crisis isn’t going away any time soon, we want to do everything we  can to help households manage their money better in order to stay ahead of rising prices.  Ultimately this then translates into making their savings work harder.

“While rates are still well behind inflation, long-term wealth is still best placed in the stock  market for growth.”