£700bn languishing in savings accounts due to inertia
SAVERS can’t bank on interest rate rises to shore up their savings and need to shop around to release money locked up in poor-paying accounts, Insignis Cash Solutions has claimed.
The cash management provider said more than £700bn is languishing in uncompetitive savings accounts and that consumers could see £7bn released by looking around for products offering just one per cent more.
Giles Hutson, chief executive of Insignis Cash Solutions, warned savers are missing out on “free money” because of inertia.
“With our free time increasingly eroded by the demands and distractions of modern society, people feel they don’t have time to prioritise their cash savings,” he said.
“We need to rethink how cash is viewed; the current inertia means savers and the UK at large are missing out on free money.
“If attitudes to cash can be turned around, savers can accumulate meaningful returns on their deposits that stack up favourably against other asset classes. For example, two-year UK government bonds currently yield 0.53 per cent while the highest two-year bank account yields two per cent.”
He said progress is being made due to new players driving more competitive rates and suggested Open Banking will be a catalyst for greater transparency, encouraging a stronger culture of account switching.
Read more: Savings crisis “looming on the horizon”
“Savers can’t bank on further rate rises alone to save the day – they need to take decisive action now,” Hutson added.
“The Office for Budget Responsibility, has recently downgraded its economic growth forecast for the UK to only 1.5 per cent in 2017, and a progressive decline to 1.3 per cent in 2020.
“This reinforces the risk that, despite the welcome rate rise by the Bank of England in November, we are in a persistent low interest rate environment and this is concerning for savers as inflation eats into their hard-earned cash savings.
“Through a more active approach to cash management, savers can start to fight back – improving cash deposit interest rates, increasing personal spending power and collectively benefiting an uncertain economy.”