New research from Investec reveals that 35% of people with cash savings now have more than they did before the Coronavirus crisis started, compared to 22% who have less. Schemes like furlough allowed some people to receive 80% of their wages whilst carrying out freelance work elsewhere, plus the business grants and loans schemes were seen as free money for many businesses, who again laid off the majority of their workforce on furlough. Other people lost their jobs or their small businesses went under, it really was a lottery.
The new findings from Investec, which offers an Online Flexi Saver account paying 0.58% AER, and a one-year Fixed Rate Saver paying 1.33% AER on balances of between £5,000 and £250,000, suggests that 5% of the population – over 2.6 million people – now have money in savings accounts when they didn’t have any before the crisis started. Of those people interviewed who now have savings, 64% are women and 45% are aged 34 and under.
One in five people (20%) claimed the value of their cash savings is at least 10% higher than before the crisis, and 2.5% say it has increased by 50% or more. The high level of savings, often held in bank accounts paying tiny fractions of interest, is an opportunity for insurers and brokers.
As the crisis developed, people increased their level of savings. Since 1st January this year, 37% of people with savings accounts had more in them, compared to 19% who had less. Furthermore, since the start of this year, 39% of people say they are now saving more on a monthly basis, compared to 14% who are saving less.
Of those saving more, 60% said it was because they had been spending less during lockdown, followed by 55% who said it is because they are going out less. One in three (33%) said it was because they had not booked a holiday. Other reasons include being more conscious of the need to save in case of an emergency (29% of respondents) and 8% who said it was because they had new jobs and were earning more.
Samantha Booysen, Head of Digital Savings at Investec, said: “The UK’s household saving ratio – the average percentage of disposable income that is saved – rose to 16.1 % in the final quarter of last year, the second highest since records began in 1963 — just behind the second quarter of 2020.
“It is encouraging to see people having so much in savings, but with so many accounts to choose from they need to make sure they understand the terms and conditions and keep a close eye on the interest rates they receive.
“Analysis we commissioned in February this year of the top 50 instant access savings accounts for balances of £5,000, revealed only 26 were ‘clean’ and didn’t have penalties, restrictions for withdrawing money, or relied on short-term bonuses to inflate returns.”
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 0.58% AER on balances of between £5,000 and £250,000, provides instant access to savings, and allows unlimited deposits and withdrawals.
Investec’s one-year Fixed Rate Saver account pays 1.33% AER. It can be opened online with a balance of between £5,000 and £250,000. Interest is calculated daily and paid at the end of the one-year term into a linked account; no withdrawals are permitted until the end of the one-year term, and no further deposits can be made after the first seven days.
For more information on Investec’s Online Flexi Saver and one-year Fixed Rate Saver, visit: https://savings.investec.com