People turn to cash as prices rise

New research by the Post Office indicates that people are turning back to cash to help them keep tighter control on their spending as living costs soar.

Latest figures show that Post Offices handled £801 million in personal cash withdrawals in July, the most since records began five years ago, an increase of almost 8% on June and up more than 20% from a year earlier (£665 million in July 2021).

While the pandemic accelerated the UK’s embrace of card and digital payments, the economic crisis –with inflation going up and many bills expected to rise further – has led a growing numbers of people to turn once again to cash to help them plan their spending.

In total, more than £3.3bn in cash was deposited and withdrawn at its 11,500 branches. The Post Office said this was the first time the monthly amount had exceeded £3.3bn in its 360-year history.

The Post Office said it was seeing more and more people increasingly reliant on cash as the tried and tested way to manage a budget.

It has attributed the record amount for personal cash withdrawals to people trying to manage their budget on a weekly and often daily basis, as well as more Britons choosing to have summer staycations rather than going abroad.

Last month, the Post Office processed more than 600,000 cash payouts totalling about £90 million for people eligible to receive energy bill support from the government.

More than 30 banks and building societies are part of a scheme that enables customers to withdraw or deposit cash at Post Offices.

Changes in spending habits that were already taking place were dramatically accelerated by the pandemic, with the number of payments made using notes and coins falling by 35% in 2020.

A growing number of businesses, both big and small, have stopped taking cash, and some, including several popular restaurant chains, appear to have gone card-only for good.

Amid concern about millions of people potentially being left behind, it was confirmed this year that the Financial Conduct Authority would be handed powers to ensure local communities across the UK have access to cash.

Martin Kearsley, the Post Office’s banking director, said “Our latest figures clearly show that Britain is anything but a cashless society.”

He added that whether it was to help pay for a staycation or prepare for rising costs, such as the fresh increase in energy bills expected in the autumn, cash access in every community is critical.