Savings are being kept at home by many people who don’t believing using a savings account will generate a healthy return.
The FSA is urging savers to put their money in bank accounts to take advantage of the new higher protection limit.
Britons are storing over £7 billion of savings at home instead of in bank accounts, new research has revealed.
The average amount kept at home is just over £280, according to a report unveiled by the Financial Services Compensation Scheme (FSCS). However, 1% of the respondents in the report said they stored over £10,000 at home and just under 5% of the 1000 participants said they kept a grand.
Two fifths of respondents said they kept a much lower figure of just £20 at their house.
The research also found that people between the age of 16 and 34 were the most likely to keep their savings at home. A third of people said that they did not place their money in a bank account because of the historically low interest rate implemented during the recession by the Bank of England.
The rate still stands at 0.5%, which is helpful to mortgage holders and people who have borrowed large sums of money from banks. However, savers have been receiving a poor return.
Chief executive of the FSCS Mark Neale said: “Even though rates are currently low, those wishing to save money should always do so with a bank, building society or credit union which is covered by the FSA [Financial Services Authority], the UK financial regulator. It is vital that savers know their money is protected up to the new limit of £85,000”.
He added that people who opt to keep their savings at home may not be covered by their insurance where as keeping it in a bank would mean that their money would always be covered even if their bank becomes insolvent.