Bank deposits still the most popular destination for savings

Deposits with banks remain the most popular form of savings, despite low rates on term deposits and at-call accounts. And the most popular destination for new savings is bank accounts.

The latest St George-Melbourne Institute Household Financial Conditions Report shows that, in September, the proportion of respondents reporting that they hold deposits was up from 84 per cent to 89.4 per cent - the highest level since the start of the survey.

The proportion who said they were "saving a little" fell from 37 per cent in the June quarter to 34.3 per cent in September, while the proportion who said they were "saving a lot" rose from 7.6 per cent to 8.8 per cent.

The proportion who said they were running into debt fell from 6.9 per cent in the June quarter to 3.6 per cent in September, and the number drawing on their savings fell from 15.2 per cent to 14.1 per cent over the same period.

While 89.4 per cent of households reported that they had deposits in September, 23.3 per cent had investment properties (up from 20.3 per cent in June), 34.8 per cent had shares (down from 35.3 per cent in June) and 20.8 per cent had investments in managed funds (down from 22.2 per cent in June).

Bank deposits are the most popular destination for new savings. A third of respondents (34.3 per cent) said they would put new savings in a bank account - up from 27.5 per cent in June.

Other popular destinations for new savings were real estate (25.7 per cent, compared with 24.5 per cent in June), paying off debt (13.7 per cent, compared with 17.3 per cent in June) and buying shares (8.5 per cent, compared with 9.9 per cent in June).

The main motivation for saving was travel, with 60.7 per cent of households saying this was the reason they were saving. Other reasons for saving included "a rainy day" (56.6 per cent), retirement (44.2 per cent), to repay debt (42.3 per cent), home improvements (36.4 per cent) and Christmas presents (32.6 per cent).