Letter to the editor: Brits must break up with banks
Re: More than £1trn languishing in low-interest savings accounts
I’ve always struggled to understand why kids in the UK don’t learn about managing their finances at school.
A lack of financial education means lots of millennials have had a long-term, one sided relationship with their bank. They’ve grown up to believe that the right thing to do is to put your money into a big bank, and rarely shop around. Meanwhile, the big banks are rubbing their hands with glee at the amazing customer loyalty they’ve received without really having to do much at all.
Our analysis of recent Bank of England data reveals that over a trillion pounds – which is two thirds of UK households’ bank deposits – sits in accounts, where the average interest rate is 2.02%. And the difference between lending and savings rates has generated significant profits for the banks.
Surely a bit of ‘sharing-is-caring’ would go a long way here? Banks should pass on some of the profit they make to their (extremely loyal) customers, whose cash earns them interest. But, somehow, we still seem to be a long way from that today.
With interest rates in the UK still at a 15-year high, cash has become a new asset class. So, people in the UK need to consider breaking up with their bank – saying goodbye to the one-sided relationship they’ve had with it since their childhoods – and start putting their money elsewhere. Only then, will they earn the interest they deserve.
Martin Sokk, Lightyear