Stub out and cash in

Last Updated: 2008-06-25 13:00:56 -0400 (Reuters Health)

By Jennifer Hill

LONDON (Reuters) - Smoking was banned in public places in England almost a year ago, and those who ditched the nicotine are cashing in.

Ex-smokers could have saved almost 2,200 pounds if they stubbed out for good when the ban came in on July 1 last year.

A 20-a-day smoker spends around 2,065 pounds per year on cigarettes. By giving up and putting the money into a high-interest savings account, they could have saved up to 2,198 pounds, according to Alliance & Leicester.

Even a social smoker, who may get through 20 cigarettes a week, could have saved around 320 pounds, including interest.

"We are all feeling the pinch on our purse-strings at the moment," says savings manager Hetal Parma, "yet, as a nation, we still spend billions of pounds on cigarettes each year -- money which could help us cover the rising cost of living or could be set aside to build up a nest-egg."

More than one in five British adults smokes, according to the Tobacco Manufacturers' Association, but smoking rates among Britons is declining.

Almost 165,000 people gave up smoking with NHS help in 2007, compared with 129,000 in 2006.

Anyone considering giving up now will benefit from a war in the cash savings market, as the fall-out from the credit crunch continues.

Barclays Bank is paying 7.49 percent on regular savings of between 20 and 250 pounds per month and Abbey is paying 7.25 percent on the same sums while Principality Building Society is yielding 7 percent on savings of between 20 and 500 pounds per month, data from price comparison website Moneyfacts.co.uk shows.

Reformed smokers could also save a packet on life insurance, as those who have not smoked for 12 months are re-classified as "non-smokers".

Michelle Slade, an analyst at Moneyfacts.co.uk, says: "Due to the increased risks from smoking, most life assurance companies charge smokers over 50 percent more than they charge non-smokers.

"Anyone looking to take out life assurance now could make a large saving."

Those with an existing policy could also benefit. Some companies re-evaluate the original policy and charge the reduced non-smoker rate, although others might insist you take out a new policy.

"If this is the case, make sure that the increased premium for your higher age does not wipe out any saving you would gain for now being a non-smoker," adds Slade.