For those deciding to save their money instead of investing it, there are several instruments. In the UK, people can pick among different financial products which offer favorable conditions and higher interest rates compared to traditional bank accounts. Access to and conditions of these saving instruments, however, depend on the objective (for instance retirement, education, or healthcare), and the commitment in terms of time and amount, meaning the consumer most likely will not have access to their money for at least an initial period of time. The most widespread among people in the UK appear to be savings accounts (bank, building society, or NSI), followed by individual savings accounts (ISA). ISAs are accounts that allow savers to earn tax-free interest on their cash savings, with a contribution limit set to 20,000 British pounds per year.
Savings during COVID-19 outbreak
Due to the coronavirus (COVID-19) pandemic, many households worldwide saw their income decrease. Among the most vulnerable groups were those operating in the tourism and hospitality, transportation, and retail sectors. On the other hand, office workers could benefit from remote working. Overall, the pandemic led to a decrease in day-to-day spending for most people. As a consequence, saving rates increased, particularly in advanced economies. In the UK, the households´ savings rate reached 25.9 percent at the height of the COVID-19 pandemic, which led to so-called excess savings lying idle in bank accounts.