In its latest Household Finance Update for April 2019, UK Finance revealed that deposits held in instance access accounts were 2.4 per cent higher than last April, with Growth Street CEO Greg Carter stating that savers are “unaware” that their money is “sitting stagnant”.
However, Carter acknowledged that the growth in personal deposits is “of course” a good sign. The figure suggested that UK adults have enough additional money to be able to set aside funds in case of an emergency.
“What I find worrying, though, is that savers might not be aware there are investment opportunities if they were willing to put their capital at risk,” he added.
“The growth in instant access bank accounts means that savers might be unaware that their hard-earned money is sitting stagnant in low-interest, instant access bank accounts which could lose value to inflation. Something we already saw in April - a 2019 high. I suspect this is due to the public not being made aware that there are alternatives to these instant access accounts via fixed term savings like ISAs.”
According to Carter, the solution to this epidemic is for regulators to mandate banks to inform savers in low-interest, instant access accounts that there is a market of investment opportunities to suit different investment risk appetites, if they are willing to “put their capital at risk”.
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