New research by the Financial Services Compensation Scheme (FSCS) has found that over £5.6 billion in cash is left in people’s homes.
Excluding money in their wallets, the average amount kept at home is just under £218. This means that across the country, the UK’s 26 million households have £5.6 billion which is unprotected under the FSCS.
The FSCS protects people when authorised financial services firms go bust. Since being established in December 2001 the FSCS has paid out £26 billion in compensation and helped more than 4.5 million people.
13% of savers are mistaken about savings protection
The large sums kept at home could be attributed to the fact that over one in ten – 13% of those questioned, the same as last year – believe their money is safer at home than in a bank or building society. Only 64% disagree with this statement.
The amount people keep at home has fallen by 22.7% as people had just under £282 when asked the same questions 12 months ago. The cumulative total kept at home in early 2011 was just over £7 billion.
Don’t stick it under the bed
Mark Neale, chief executive of the FSCS, said: ‘We protect all savings up to £85,000 per person per firm, which means that 99% of the population are covered. Even though rates are currently low, all cash up to the limit is safe in an authorised financial institution.
‘By contrast, any cash which is kept at home receives no interest, and may not be covered by household insurance and so could be lost if the house is damaged. If a bank or building society was to fail, most customers would get their money back in less than a week, so there really is no need to keep it under the bed, in a jam jar or even, as one person told us, the handle of a fishing rod.’
Paul Davies, savings analyst at Which?, added: ‘Having money stashed at home that isn’t earning interest is an oversight, even in today’s low interest rate environment. Take the time to shift your money into a Best Rate savings account to get protection for your cash and to earn a decent level of interest.’