Credit crunch leads Brits to 'stash cash under mattress'
Saturday, 26 Apr 2008 00:01
One in ten prefer to keep savings at home than the bank
The collapse of Northern Rock and the credit crunch has led to one in ten Brits thinking putting cash under their mattress is their safest option.
Research by Newcastle Building Society reveals 11 per cent of people would prefer to keep their cash under the mattress, up from four per cent a year ago.
When asked where the safest place to invest £10,000, 57 per cent said banks or building societies – down from 74 per cent a year ago – as the Northern Rock crisis erodes faith in the financial industry.
Wendy Lee, commercial director at Newcastle Building Society, said: "These findings are a stark sign of the times, but they are also exacerbated by the hype surrounding the 'credit crunch'.
"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.
"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."
However, more investors are now looking for stable and risk-free returns – even if they are lower – but this may lead to losing out as inflation eats the value of your cash.
Jonquil Lowe, author Which? essential guide save and Invest, said: "There is no such thing as risk-free saving. Even sticking cash under the mattress is a fairly risky strategy, as your capital will be seriously eroded by inflation over time.
"For short-term savers, a cash ISA or other high-interest savings account is a good option. But for those savers who are looking at a longer period of time and are willing to be a bit more adventurous, other options could give a greater return.
"The key to all successful long-term saving or investment is to make sure you’ve done your homework, understand the options and, if you’re uncertain, take sound financial advice."
Across the country savers in the Midlands/Wales are most likely to look to their mattress, while Londoners were most likely to choose banks and those in the south most readily trusted building societies with their dosh.