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Home cash hoarders warned of dangers

Home cash hoarders warned of dangers

Category: Savings

Updated: 27/02/2012
First Published: 27/02/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

More than £5.6 billion in cash is currently being kept in homes around the UK because people think it is safer there than in a bank.

Excluding money in their wallets, people keep an average of £218 at home, according to new research by the Financial Services Compensation Scheme (FSCS).

Although a third (33%) of those questioned said they have less than £20 at home, around one person in 33 admitted they had more than £1,000 stashed away at home.

The FSCS, which protects the savings of people when banks and building societies go bust, said the large sums kept at home could be attributed to the fact that over one in ten (13%) people believe their money is safer at home.

The scheme warned that any money squirreled away under the bed is largely unprotected in the event of a house being damaged, with the top insurance policies only covering up to around £1,000.

Even in the highly unlikely event that everyone surveyed had the top insurance policy, this would still leave around £170 million unprotected.

Mark Neale, chief executive of the FSCS, said he hoped people were beginning to realise that money is safest in a bank, building society or credit union which is protected by the FSCS.

"We protect all savings up to £85,000 per person per firm, which means that 99% of the population are covered," he added.

"Even though rates are currently low, all cash up to the limit is safe in an authorised financial institution.

"By contrast, any cash which is kept at home receives no interest, and may not be covered by household insurance and so could be lost if the house is damaged.

"If a bank or building society was to fail most customers would get their money back in less than a week so there really is no need to keep it under the bed, in a jam jar or even, as one person told us, the handle of a fishing rod!"

Since being established in December 2001 the FSCS has paid out £26 billion in compensation and helped more than 4.5 million people.

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