Hoarding not Saving!
Nearly six in 10 people are holding coins at home, according to a survey by banking trade body UK Finance. People tend to hold on to 1p, 2p, 5p and 10p coins. The findings have prompted pleas for this money to be given to charity, as cash donations dropped during the Covid crisis.
UK Finance data suggests that people have been holding on to cash three times longer than they used to owing, in part, to the coronavirus lockdowns. Many retailers and entertainment venues were shut, and some shops have encouraged the use of contactless payments over cash. The research said that cash use had risen – notably among 35 to 54-year-olds – as restrictions were eased.
“It is clear that with the reopening of the economy there has been some degree of revival in cash transactions,” it said.
Adrian Buckle, head of research at UK Finance, told the BBC that when people received a high-value coin in change, such as a £1 or £2 coin, they tended to carry it with them and spend it. However, when it came to a low-value coin, “seven out of 10 of us will drop it in a pot at home and we forget about them”.
With those coins disappearing from circulation, more had to be manufactured to replace them, with the cost reaching £50m last year, he said. The stash of low-value coins in people’s homes still showed little chance of being spent in the next two or three months, the report suggested. Among the 1,000 people surveyed, most tended to hoard cash primarily for security, but also to pay friends and neighbours for shopping, for gifts and for pocket money. Although the amounts held tended to be below £100, this could have an impact on the way cash flowed around the economy, the report said.
UK Finance said this raised questions about the mix of coins in circulation in the UK. Two years ago, the Treasury said that 1p and 2p coins would continue to be used “for years to come”.
“Industry and policymakers may need to actively encourage greater recycling of hoarded cash to avoid significant wastage to the UK economy,” the report said.
One way to do that was by urging people to give loose change to charity, it said. The Charities Aid Foundation found that more than half the charities they spoke to last year had seen a drop in donations. That coincided with four in 10 charities reporting increased demand for help from those in need.
“Cash donations to charities, normally the country’s most popular way of giving, saw a substantial decline during 2020 and remain at very low levels compared to previous years,” said Neil Heslop, chief executive of the Charities Aid Foundation. As charities struggle to resume fundraising, while continuing to work on the frontlines of the response to the pandemic, donating spare loose change would be a huge show of much-needed support at a critical time.”
Eric Leenders, managing director of personal finance at UK Finance said: “Putting your pennies in a charity box is a great way to help those in need.”