The UK savings ratio – the amount of money households save as a percentage of their gross disposable income — reached 16.3 per cent in 2020, up from 6.8 per cent in 2019, and Investec estimates the average UK household now has around GBP4,353 in excess savings. This equates to around GBP2,309 per adult.
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 GBP5,000, 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, says: “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.”