Most PPI claims spent on booking holidays
The average claim payout for payment protection insurance (PPI) is £2,810 and most people use the money to pay for a holiday, according to new research.
While 24% treated themselves to a trip, a new car was the next most common purchase with 22% saying that's what they splashed out on after receiving a PPI windfall, a survey by money-saving website VoucherCodesPro has revealed.
Further down the list were home appliances such as fridge freezers, followed by paying bills and then household furnishings.
The survey also found that it only took two and a half weeks on average to spend the money from a settled PPI claim and only 12% of people put any in savings.
Meanwhile, only a fifth of respondents had successfully received a payout. A further 13% felt they might have been eligible to make a claim, but hadn't done so yet.
George Charles, spokesperson for VoucherCodesPro.co.uk, said the following: "It was really interesting to see what these PPI claims are being used for, with the cash mostly going towards a few luxuries. However, some people are using the cash to pay bills and buy groceries, but we're in full support of those who stash it away in savings."
The most common purchases from mis-sold PPI claims
1. Holiday - 24%
2. New vehicle - 22%
3. Home appliance(s) - 19%
4. Bills - 17%
5. Home furnishings - 13%
6. Put it in savings - 12%
7. Clothes - 10%
8. Gadgets - 8%
9. Shoes - 5%
10. Groceries - 3%
An unexpected one-off financial gain in cash or shares, generally when mutual building societies convert to stock market-quoted banks. Also windfall tax, a one-off tax imposed by government. The UK government applied such a measure in the Budget of July 1997 on the profits of privatised utilities companies.
Payment protection insurance is designed to cover you should you fall ill, have an accident or lose your job and can’t make repayments on loans or credit cards. However, research by consumer watchdogs found the cover to be overpriced, filled with exclusions (policies exclude self-employment, contract employees and pre-existing medical conditions) and were often mis-sold because the exclusions were never fully explained. In May 2011, the High Court ruled banks had knowingly mis-sold PPI and ordered them to compensate around two million consumers.