The UK savings ratio – the amount of money households save as a percentage of their gross disposable income – reached 16.3% in 2020, up from 6.8% in 2019, and Investec estimates the average UK household now has around £4,353 in excess savings. This equates to around £2,309 per adult.
In general, many in the public sector have done quite well from the pandemic, as they have suffered zero loss of income and many have been able to take on extra overtime too. With no overseas holidays to pay for and reduced commuting costs, many households have enjoyed a financial boost, in stark contrast to those in hospitality, events or retail, who have sometimes lost their entire livelihood.
As the economy recovers and restrictions are lifted, many people with excess savings are expected to want to spend much of this, but Investec warns they may be caught out by restrictions and penalties on their savings accounts.
Investec commissioned research earlier this year on the top 50 instant access savings accounts for balances of £5,000, and it revealed that only 26 of the top 50 instant access savings accounts were ‘clean’ and didn’t have penalties and restrictions for withdrawing money or relied on short-term bonuses to inflate returns. The corresponding figures for the top 20 and 10 instant access savings accounts were 13 and four, respectively.
Investec’s research, which was conducted by Andrew Hagger of MoneyComms, revealed that 17 of the top 50 instant access savings accounts limited the number of withdrawals customers could make, and 11 charged interest penalties or reduced the interest rate paid to savers who make more withdrawals than their accounts allow. Six didn’t allow any further withdrawals for the year once the maximum permitted number had been reached, and for three, there were restrictions as to who can open them such as needing to have a current account with the provider.
Samantha Booysen, Head of Digital Savings at Investec, said: “It is encouraging to see the savings ratio at such a high level, but with so much ‘excess savings’ we expect many people will want to go out and spend, and may face some obstacles when they try and access cash in their savings accounts. However, it is possible to find an attractive interest rate with instant access to your money with no restrictions.”
Investec’s Online Flexi Saver account is a simple and secure instant access savings account that is easy to use online. It pays an interest rate of 0.4% AER on balances of between £5,000 and £250,000, provides access to savings, and allows unlimited deposits and withdrawals and can be opened in minutes.
For more information on Investec’s Online Flexi Saver, visit: https://savings.investec.com
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