Keeping cash at home could be costing UK savers hundreds of pounds a year, according to research from Nottingham Building Society. The study found that around seven million people in the UK keep a stash of cash at home, missing out on potential growth from savings accounts.
Younger savers are more likely to hoard cash, with 18% of 18-24 year olds and nearly a fifth of 25-34 year olds keeping savings at home, compared to just 10% of those over 60. Harriet Guevara, chief savings officer at Nottingham Building Society, noted that social media trends like 'cash stuffing' have made physical cash popular among younger adults.
Guevara warned that inflation erodes the value of cash kept at home. At the current inflation rate of 3.6%, £1,000 loses around £36 a year in spending power, while £5,000 loses £180 and £10,000 loses £360. Additionally, savers miss out on interest earnings. A 3.75% Cash ISA would turn £1,000 into £1,037.50 in a year, compared to £964 in real value if kept at home—a difference of £73.50.
Guevara advised keeping only a small amount of cash at home for emergencies, enough for a couple of days' essentials. Most home insurance policies cover cash only up to £200-£500. Any excess should be placed in a savings account to earn interest and protect against inflation.
