Long Read  

Demand for cash deposits has changed

With the steepness of the yield curve at present, depositors should be reassessing the yield they are giving up by retaining funds on instant access. It is therefore an appropriate time for holders of cash to reassess available yields on rainy day cash, and to minimise the ‘in case I need it’ element of their holdings as much as possible. 

The cash landscape has changed quickly and maximising returns in the current rate environment should be a priority for all depositors. 

How to do it varies as to whether you are an individual or a business. The key in all situations is to have multiple banking relationships. When rates rise banks seek to increase their net interest margins by paying less for existing and new deposits than they charge for their loans.

However, with the liquidity from central banks drying up depositors are becoming important again.

Understanding the value of your cash and accessing the best rates is not an easy task, especially as an individual. Moving your cash to a wealth manager who has multiple relationships and can access attractive rates on your behalf is one way. 

The next question is when will interest rates peak and what should you do with your cash at that time. Something for next time.

Jerry O’Keeffe is managing director of JCAP