What you need to know

The value of deposits and savings increased by 4.3% in 2019 as a range of positive indicators put more money into household finances while spending was held back by Brexit uncertainty. Although this uncertainty appeared to have eased in early 2020, the COVID-19 outbreak has produced a huge shock to household finances and consumer confidence. This will lead many consumers to boost their savings as they look to build up a buffer against future uncertainty.

The lockdown and social distancing measures will force some to dip into their savings. However, many are likely to see their income maintained but their expenditure curtailed. This will create a rise in cash deposits. With interest rates at such low levels, though, much of this will end up in current accounts or easy access savers attached to their main bank paying little interest. At times of upheaval, saving becomes as much of an emotional imperative as a financial one: interest rates are less important than the sense of security provided by having an emergency fund tucked away.

Key Issues Covered in this Report

  • The impact of COVID-19 on the deposit and savings market.

  • How the economic crisis associated with COVID-19 will change saving behaviour and consumers’ priorities when looking for savings products.

  • The value of deposits in different types of cash savings products.

  • The saving habits and behaviours of consumers.

  • Consumer priorities when choosing a savings product.

Products covered in this Report

The focus of this Report is retail deposit and savings accounts for the adult market. Cash ISAs and current accounts are the subjects of separate Mintel Reports, although these products are covered in this Report to some extent, due to their close association. Children’s savings accounts are not covered in this Report, and are the subject of a separate Report.

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There are various types of deposit and savings accounts available to UK adults. The main ones are as follows:

  • Easy access (or instant access) savings account – the most widely available and commonly held type of account, which does not impose any restrictions on making withdrawals and provides either a variable interest rate or a fixed/guaranteed interest rate for an introductory period.

  • Notice account– this is where the account holder must give a certain number of days’ notice before making a withdrawal so as not to lose any interest.

  • Fixed-term/fixed-rate savings account or bond – offers a fixed rate for a fixed term, usually between one and five years.

  • Regular savings account – where the account holder is required to make regular monthly payments (usually ranging from £25 to £250 or £500 a month) in return for a higher interest rate.

  • Cash ISA (individual savings account) – similar to ordinary savings accounts, in that there are different varieties (eg instant access, fixed term), but all interest earned is tax free.

  • National Savings & Investments (NS&I) – provides a range of tax-free cash savings products, backed by HM Treasury, the most popular of which are Premium Bonds.

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