By Lisa Walls-Hester on 27th January 2017
The Financial Services Compensation Scheme (FSCS) is set to increase the limit of insured bank deposits from £75,000 to £85,000 next week, but research says consumers would prefer a higher return over increased protection of their money.
The FSCS currently protects up to £75,000 of deposits held in a bank or building society but from Monday, this will increase to £85,000.
According to a survey commissioned by RateSetter, only four per cent of people in the UK have more than £75,000 in savings and therefore stand to benefit from the increase in protection. More than two-thirds of people (67 per cent) have £10,000 or less in savings.
Asked whether they would rather have a more protection for their savings or earn a higher rate of return, the vast majority of savers favoured the latter, with 69 per cent saying they would rather earn one percentage point more in interest than have an extra £10,000 of FSCS protection.
Commenting on the findings, Rhydian Lewis, CEO and co-founder of RateSetter, said: “While the FSCS tinkers around yet again with the level of protection it provides, it is abundantly clear that what people really want is a better returns on their savings.”
“With record low returns on savings that can’t even match inflation, it’s no wonder that more people are deciding to put some of their money to work, by accepting some risk in exchange for a higher rate of return.”
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