The amount of cash held in instant access savings accounts with high street banks rose by 4.4% year-on-year in May to £635.7bn.

The sum of money held in fixed-term and notice accounts fell by 6.3% to £205.9bn, a similar fall to the previous month, the latest figures from lobby group UK Finance show.

Total deposits held in personal current and savings accounts were up 1.6% to £841.6bn.

Eric Leenders, managing director, personal finance at UK Finance, said: “The overall economic picture remains mixed, as household incomes continue to be squeezed. This may explain the growth of deposits held in instant access accounts, with consumers increasingly choosing to keep their money close to hand.”

But Laura Suter, personal finance analyst at AJ Bell, suggests savers have another motive for keeping their cash accessible.

“Savers are clearly gearing up for an interest rate rise and will have been disappointed when it failed to materialise in May,” she said.

“Savers are keeping their options open so they have the flexibility to take advantage of better deals should they materialise following an interest rate rise.”

Credit card spending increases

The UK Finance data showed credit card spending was 2.3% higher than a year earlier, with outstanding levels of card borrowing up by 5.7% over the year. The total of 193 million credit card purchases in May was well above the previous 12 month average of 181 million, reflecting increased retail sales.

Outstanding overdraft borrowing was 3.9% lower compared to the same time last year.

Mortgage approvals rise

Gross mortgage lending increased 8.8% in May to £22.2bn and mortgage approvals increased by 3% compared to the same month a year earlier.