Some people are keeping considerably more than the average, with 2% stashing more than £1,000 under the mattress.

However, they could risk losing it all as most of the cash will not be protected by home insurance policies, with high-end policies only covering up to about £1,000, the Financial Services Compensation Scheme (FSCS) warns.

By contrast, FSCS protects deposits in UK-regulated banks, building societies and credit unions up to £85,000 per person.

FSCS, which is free to consumers, has helped more than 4.5 million people and paid out more than £26bn since 2001.

The financial services industry funds the scheme through a compulsory levy.

Mark Neale, chief executive of FSCS, said: “In these tough times no one can afford to lose their hard earned cash.

“In the unlikely event of a bank, building society or credit union failing, the vast majority of customers will get their money back within seven days. There really is no need to keep it under the bed.”