5 hours ago
Noah NanjiBy Angela Henshall Business Correspondent, BBC News
image provided, Getty Images
With the cost of living soaring in the UK, many people are returning to using cash to keep their spending tighter. A new survey by the UK Post Office reveals just that.
In July, the total amount of cash withdrawn by individuals at post offices in the UK was £801m ($1.2bn) per month.
It was the highest amount since records began five years ago, and is more than 20% higher than a year ago.
Natalie Seaney, chairman of the Cash Action Group and chair of the government’s independent review panel on “access to cash,” said people were “literally counting their pennies” to deal with rising prices. said that
“It’s definitely because of the cost of living crisis.”
“People will pull cash out, put it in a pot, and say, ‘This is the bill, this is the food, and this is the rest.'”
The impact of staycation
In the UK, prices are currently rising the fastest in 40 years.
Income has not kept up with rising costs of living, putting pressure on household budgets.
Meanwhile, total cash deposits and withdrawals at domestic post offices stood at £3.32 billion in July, up £100 million from the previous month.
£801m of cash was withdrawn by individuals, up regarding 8% from the previous month and more than 20% from the same month last year.
This is the only second time that individual cash withdrawals have surpassed £800m. The last time was in December 2021, but according to Post Office, a British company that handles counter services for post offices, withdrawals usually increase at the end of the year.
The company also said the increase in withdrawals at its 11,500 post offices nationwide was due to more people using cash to manage their weekly and daily budgets.
In addition, an increase in people practicing “staycations”, where they spend their vacations at home or nearby, is also contributing to the increase in cash handling. A recent survey by the company found that 71% of Britons planning to spend their holidays in the country plan to withdraw cash before leaving.
Increase in deposits
“More and more people are turning to cash as a reliable way to manage their budgets,” said Martin Kiersley, director of banking at the Post Office.
Cash deposits are also on the rise, according to the company’s research.
Personal cash deposits were £1.35 billion in July, up 2% from the previous month. Business cash deposits also rose 1.9% to £1.13 billion in July.
Kearsley said the data showed Britain was “far from being a cashless society”.
Thrift by counting coins
Mr Seaney told the BBC it was easy to understand the increased use of cash given the rising cost of living.
“Cash has been declining for more than a decade and the[coronavirus]pandemic has accelerated that.
“With cash, you can literally count your change, which makes it easier to manage your finances. Everyone knows that if you pay with a card, you will end up borrowing money you don’t have.”
“If you only have £30 left this week, holding it in banknotes and coins is the most effective way to budget and control your spending.”
Salford University student Kira Hayward took inspiration from social media to pull cash out of her bank account to help cope with the rising cost of living.
Kira Hayward says she uses cash to manage her budget and spending
She keeps her cash in differently labeled envelopes. She says she has money set aside for food and bill payments.
“I learned regarding these physical budgeting methods on Instagram and YouTube,” she told the BBC in May. She “pulls money out of the bank and budgets for things like shopping. When you find out you have £80 for personal purchases this month, you know you can’t do more.”
With many banks closing their branches, post offices and others are being asked to do their part to help people get the cash they need, Seaney said. It is especially important to make cash available to the vulnerable and the elderly who do not have access to digital banking.
“The reality is that digital isn’t for everyone,” Seaney said.
“With millions of people without access to computers and smartphones, cash must survive.”
