On average UK adults have almost a third (31%) of their savings (excluding property and equity ISAs) in cash according to new research1 from Investec Private Bank. In addition, the research shows that around one in five (20%) UK adults have at least half of their savings and liquid assets in cash savings accounts.
The bank reveals that market volatility over the past few months has resulted in many people increasing the proportion of their assets that are held in cash form, with savers now having on average an estimated £18,000 deposited in cash savings accounts and over one in ten (12%) UK adults having more than £25,000 in these accounts.
However, Investec warns that almost a third of all savers (32%), equivalent to over 12 million UK adults, have no idea what rate of interest they are getting on any of their savings accounts. This is of particular concern to the estimated five million1 savers who have balances of £25,000 or more and who typically receive a rate of just 1.36% gross AER2, according to Investec’s latest Savings Index3. This compares to the Investec High 5 account which currently pays 3.12%4 gross AER2, 2.62% above the Bank of England base rate.
Linda McBain, head of Banking at Investec Private Bank said, “Many savers have accumulated significant sums in their savings accounts but are now missing out on higher rates of interest by leaving their cash in accounts paying derisory rates. Those with larger deposits could be missing out on hundreds of pounds in interest each year unless they switch to accounts paying a consistently competitive rate of return.”
Linda McBain continues, “Despite the low interest rate environment, there are still a good number of accounts for savers to choose from, but it’s important that they look at the promises behind the headline rate. Some accounts make short-term rate promises while others are based on bonuses. However, our High 5 Account makes a life-time promise to track the average rate of the top five best-buy accounts, those savings accounts with the highest rates of interest.”
The Investec High 5 Account, which requires a minimum investment of £25,000, pays a market leading rate because each week Moneyfacts take the five highest savings rates in the market, finds their mid-point and sets this as the rate for the High 5. This means that savers have the added assurance that the rate is set independently. Unlike other accounts, it does not rely on bonuses to inflate the rate.