A packet of Haribo sweets comes with a multitude of health warnings: Not suitable for children under 3 years; May contain traces of milk; Excessive consumption may produce laxative effects (some are more off-putting than others).
Similarly, we’re used to seeing wealth warnings on investment promotions: Capital may be at risk as the value of investments can go down as well as up.
These warnings are cautionary, helpful. They encourage us to pause for a moment, to consider our alternative options – a banana or paying off our debts perhaps.
Why, therefore, do banks not do the same?
Advice from Mary Poppins
For years, banks have been hailed as a safe haven for cash. Their high interest rates have led many of us to follow the advice of Dick Van Dyke in Mary Poppins and stay “patiently, cautiously, trustingly” invested in the bank.
What the song fails to acknowledge is that being too cautious with cash can quietly cost you. Indeed, there’s no lyric about investing “thoughtfully, prudently, logically” in riskier areas like a stock market fund, which generally deliver higher levels of growth over the long term.
Yet even with this lyric included, for many, the security of a bank is just too appealing. With instant access savings rates hovering around 4% to 5%, and no apparent risk of capital loss (assuming you’re using a reputable provider), it’s no surprise that many are content to keep their money sitting safely in cash. It feels responsible — even wise.
But that comfort can be misleading.
The hidden cost of banks
On the surface, today’s savings rates seem generous. But here’s the catch: these higher rates haven’t appeared out of nowhere. They’ve been driven by something far less welcome — inflation.
When inflation rises, it quietly eats away at the value of your money. So while your bank balance might grow by 4% in a year, if prices are rising by 3.4%, your real return is only about 0.6%. In many cases, especially with accounts offering lower rates, your money is effectively shrinking in value.
This is the economic sleight of hand we don’t talk about enough. Interest rates have risen to fight inflation, not to reward savers.
Of course, for some, easy access to cash isn’t just a preference — it’s a necessity. Whether for emergencies, irregular income, or peace of mind, holding money in the bank can be the most practical choice.
Yet what is being done to inform people about the associated risks? If banks are not warning people, who will?
UK companies must do more
The Financial Conduct Authority has urged UK employers to “step up their efforts to improve financial literacy and support.” As the primary source of income for most people, it’s time companies took a more active role in financial education — not as a perk, but as a necessity.
That’s where MicroFact comes in. By helping teams better understand savings, pensions, and investment choices, we empower employees to make decisions that protect and grow their wealth.
Financial education shouldn’t be optional. It should be readily available and come with the appropriate warnings: Suitable for children over 3; May contain traces of growth; Excessive consumption may produce long-term savings.
Interested in championing employee financial wellbeing?
Get in touch with MicroFact at contact@microfact.co.uk to find out more about our solutions.
