Gen Z would moderately their financial institution gave them free espresso than a prime rate of interest

There is a growing chasm between how younger Generation Z and older generations save money. 

The latest research suggests younger savers would prefer their bank to give them perks such as free coffee, rather than a high interest rate on their cash. 

According to Investec, three quarters of adults between the age of 16 to 28 value banks that reward everyday spending, according to Pay UK which owns and operates the Current Account Switch Service.

Over half said everyday perks such as free coffees, food and cashback matter more to them than traditional benefits like interest rates. 

Other freebies offered alongside current accounts include cinema tickets, online streaming subscriptions and restaurant discount cards.  

Many accounts also offer access to preferential savings rates, but two third of the young people surveyed said it was the ‘little treats’ that made them feel they were getting extra value. 

It comes as separate research from Investec reveals four in ten adults use a ‘savings ladder’ technique to build up their pots.

The savings ladder sees savers holding multiple fixed-rate accounts with different maturity dates, to maximise the return on their money while maintaining regular access to their savings pot.

Almost three quarters of adults who spread their savings across multiple fixed-rate accounts saying they did so to pick up the best rates on offer at the time. 

The trend of younger savers preferring perks to cold hard cash may be caused by changing priorities. 

Many young people now believe financial milestones such as getting onto the housing ladder are out of reach for them and for this reason don’t see the point in putting away their money for it, instead choosing to spend money on small luxuries.  

John Dentry, product owner at Pay UK says: ‘Gen Z aren’t looking for complex financial products or rewards to target in the future – they want to see value day to day. 

‘For many younger people, the big milestones such as stepping onto the property ladder, getting married or starting a family feel further away than they did for previous generations, especially in the context of cost-of-living pressures.’