Three quarters of consumers don’t know that “their money is being traded the moment they open a bank account”, new research has found.
According to the research from Forex firm Learn to Trade and YouGov, 76 per cent of UK savers did not know that banks use money from their current accounts and savings accounts to lend to other customers for profit, in a process known as ‘fractional reserve system’.
Approximately eight in ten (81 per cent) of those surveyed said that they would like more transparency on how their money is being invested.
Once they had been made aware of this system, 29 per cent said that they would be more likely to change their banking behaviour in future; either by putting less money in banks, finding alternative investment methods, or reading the terms and conditions more carefully when opening a new account.
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However, nearly half (48 per cent) of all savers said that they would continue to use their bank accounts because they don’t know where else to put their money, while 53 per cent said that they did not have enough knowledge of the alternative investment methods available to them.
“While currently there is scepticism in the UK around alternative saving methods – such as Forex trading – what consumers fail to realise is that their money is being traded the moment they open a bank account,” said Greg Secker, chief executive of Learn to Trade.
“For banks, savings are deposited assets to be traded between one another. In return they give Brits back absolutely minuscule interest – per year – for the capital they’ve unknowingly invested into them.
“While the Bank of England’s anticipated interest rate hike in May will go some way towards helping consumers earn more on their savings, it’s too little too late! It’s clear from the research that consumers, who have bared the brunt of flat interest rates over the last 10 years, are considering alterative, higher return investment methods.”Last updated: March 22nd, 2018