Clients keeping cash in low-rate savings accounts are only marginally better off than putting it under the mattress, research from challenger bank Charter Savings Bank has claimed.
Paul Whitlock, director of savings at Charter Savings Bank, said that High Street banks were “the modern day mattress for UK savers”.
With Q3 figures from the Bank of England suggesting that UK homes have £3bn of cash stashed away in shoe boxes or biscuit tins, Mr Whitlock said adults in most High Street banks were faring only marginally better, given low rates of interest and the potential for rising inflation to erode the value of any savings.
According to research from the bank, carried out together with YouGov among 2145 adults, some 21 per cent of UK adults with cash savings in the bank are earning 0.5 per cent interest or less.
The average UK savings pot totals £8,500, equating to average yearly interest of just £43 a year before tax.
Adviser view
Kevin Caley, managing director of Midlands-based lending adviser ThinCats, said: “The Funding for Lending Scheme may have marginally increased lending to businesses, but it has been a disaster for savers.
“The Bank of England effectively subsidised bank lending, thereby reducing the cost of capital, and giving banks little need to attract deposits from savers, all of which has driven down saving rates.”
