Savers are becoming increasingly cautious with their savings by choosing to put their money into instant access accounts over fixed term savings accounts, recent data from UK Finance shows.
The amount savers have been putting into high street saving accounts has increased from £835bn in January 2018 to £838bn in January 2019 and, despite fixed rate accounts typically offering the best rates to savers, consumers are instead forgoing higher rates for greater accessibility to their money. Data from UK Finance also reveals that in January 2019, £642bn was saved in high street instant access accounts while just £196bn was saved into notice or fixed term accounts, whereas a year ago savers preferred instant access accounts, as they do now, but £626bn was placed in these types of accounts while £208bn was saved in notice or fixed term accounts.
Despite usually paying a lower rate, savers may be opting for instant access accounts instead of fixed rate accounts due to the current economic uncertainties, and to ensure they can gain quick access to their money without any penalties. While fixed term and notice accounts often offer higher rates, there are still some good deals to be found with instant access accounts, which savers can compare using the Best Buy savings rate chart.
Rachel Springall, finance expert at Moneyfacts.co.uk, said:
"Clearly savers are being cautious with how long they are prepared to tie up their cash and consequently, the amount of money put into high street easy access accounts has risen year-on-year. While economic uncertainties continue, savers may well want to avoid investing in an account that requires them to give notice or that locks their cash in over a specific fixed term.
"Indeed, the latest household finance statistics from UK Finance show that the amount of money invested into high street notice or fixed term accounts has fallen and not only this, but the annual savings growth has plummeted to just 0.4%, down from 2.2% seen a year prior.
"Savers who are currently searching for an easy access deal would do well to consider the latest Best Buys because many of the top rates available are for those who apply online. However, if they do want quick access, they must be mindful that not all deals permit frequent withdrawals without some sort of penalty."
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.