The biscuit tin bank

Brits are collectively keeping a huge amount of cash at home and potentially missing out on millions of pounds of interest, according to research from Virgin Money.

£3.5 billion in cash, the equivalent of 1000 Police Officers Annual Salaries, the cost of Five Wembley Stadiums or more than the Entire GDP of The Bahamas, is sitting in the aptly named ‘Biscuit Tin Bank.’ And it’s costing Brits a fortune as inflation eats away the value of their cash every day it’s left there.

According to a forecast of future inflation based on market interest rate expectations, £3.5billion in cash stored away from now until 2010 would lose around £200 million worth of purchasing power.

Brits are also missing out on a staggering £174million in interest payments a year - enough to pay 5,400 full time nurses. And if Brits think they are cheating the taxman by keeping their money hidden under floorboards – they aren’t – they are only cheating themselves. If Brits were to put that money into mini cash ISA’s, interest after five years would balloon to £877million according to current market interest expectations.

And if it’s stocks and shares you want to dabble in – had Brits invested the £3.5billion in the top ten stocks, the capital gain would have been £2.6 billion – that’s more than three times the price tag of the new Wembley stadium!

1 in 6 Britsadmit to keeping their money in various places at home rather than putting it safely in the bank with 15% admitting to keeping up to £1,000 in their homes last year and an astonishing 2% keeping up to a staggering £5,000.

But why are they risking such large amounts of money? The research shows that 6% are hiding it from their partners, 4% don’t trust their banks and 1% are hiding it from Gordon Brown.

Perhaps more surprising than their reasons for stashing it, is the bizarre locations that the secret stash is kept. These ranged from under the floorboards or mattress to in the fridge!

Dr Alexander Koch, financial economist at Royal Holloway University who carried out the research commented “Keeping cash at home is not wise: the British are throwing away the opportunity to easily earn several hundreds of millions of pounds of interest over a few years.”

John Franklin of Virgin Money said “If your biscuit tin is full of cash, it’s time you bought some custard creams and put the rest of the money somewhere it can grow.”