The latest Household Finance Update from UK Finance shows:
6.3% fall in cash held in fixed term or notice accounts
Cash held in instant access accounts up 4.4% over same period
Cash held in Cash ISAs with high street banks falls 5.3%
Laura Suter, personal finance analyst at AJ Bell, comments:
“Savers are clearly gearing up for an interest rate rise and will have been disappointed when it failed to materialise in May.
“The sum of money held in fixed-term and notice accounts fell by 6.3% in May, a similar fall to last month, but the amount held in instant access accounts is on the rise. This suggests savers are keeping their options open so they have the flexibility to take advantage of better deals should they materialise following an interest rate rise.
“Cash ISAs continue to be less important to savers, with a 5.3% fall in the amount held in these accounts via high street banks in May. The introduction of the Personal Savings Allowance, which allows basic rate taxpayers to have £1,000 of savings interest tax free each year, has clearly diminished the appeal of cash ISAs.
“Some savers will also have turned to stocks and shares ISAs in search of higher returns that avoid the value of their savings being eroded by inflation.”