Savings accounts ditched for piggy banks by wary savers

29 April 2008 / by Rachael Stiles
Savers are becoming increasingly cautious in light of the credit crunch, with 10 per cent opting to stash their savings under the mattress or in other places around the home rather than in a savings account.

Newcastle Building Society has discovered that one in 10 savers are now swapping traditional savings accounts for the less conventional options as a means of savings, which is an increase from four per cent last year.

However, a bigger number of savers still perceive building societies as the safest place to keep their savings, with more than a third entrusting them to a building society account.

The current uncertainties in the financial markets and the toll this is taking on the consumer has left people wary and strapped for cash, illustrated by the 17 per cent decline in the number of people investing in either banks or building societies during the last 12 months.

The assumed security of both banks and building societies has been damaged by the credit crisis, as a year ago almost three quarters of consumers would have put their faith in banks or building societies, with the latter still coming out on top.

Wendy Lee, commercial director at Newcastle Building Society, says that the fact that more than a third of people still consider building societies a viable place to keep their savings is encouraging in light of the current financial turmoil that households are facing.

"These findings are a stark sign of the times, but they are also exacerbated by the hype surrounding the ‘credit crunch'." she said. "With some attractive savings products available, you might think people are barmy to stash their cash at home. Unfortunately, some savers now have an exaggerated view that investing their money with a building society or bank can be a risky business, which is not the case."

The last 12 months has seen confidence in banks decline by five per cent, with less than a quarter of savers considering them the most reliable place to keep their money. The number of people who do not know where is best to save has almost doubled to 13 per cent and an additional 19 per cent of savers would not entrust their savings to any traditional financial institutions at all.

Ms Lee added: "People should speak to their savings provider if they are looking to invest or if they are concerned about existing investments - in the vast majority of cases people will be reassured."

Meanwhile, NS&I has found that developments in technology and social practices will see an increase in the number of people who keep their finances secret from their partners. Research has revealed that by the 2050s, the number of 'secret squirrels' will rise to similar levels since in the 1950s, when few women possessed information about their husband's income or financial affairs.

It is likely that approximately a quarter will keep secrets about money and savings in 50 years' time, compared to about one in eight today, but the gender tables have turned, as today it is women who keep their partners in the dark.

© Fair Investment Company Ltd