Postal savings

Postal savings systems provide depositors who do not have access to banks a safe and convenient method to save money. Many nations have operated banking systems involving post offices to promote saving money among the poor.

In 1861, Great Britain became the first nation to offer such an arrangement. It was supported by Sir Rowland Hill, who successfully advocated the penny post, and William Ewart Gladstone, then Chancellor of the Exchequer, who saw it as a cheap way to finance the public debt. At the time, banks were mainly in the cities and largely catered to wealthy customers. Rural citizens and the poor had no choice but to keep their funds at home or on their persons.

The original Post Office Savings Bank was limited to deposits of £30 per year with a maximum balance of £150. Interest was paid at the rate of 2.5 percent per annum on whole pounds in the account. Later, the limits were raised to a maximum of £500 per year in deposits with no limit on the total amount. Within five years of the system's establishment, there were over 600,000 accounts and £8.2 million on deposit. By 1927, there were twelve million accounts—one in four Britons—with £283 million (£15,234 million today) on deposit.

The British system first offered only savings accounts. In 1880, it also became a retail outlet for government bonds, and in 1916 introduced war savings certificates, which were renamed National Savings Certificates in 1920. In 1956, it launched a lottery bond, the Premium Bond, which became its most popular savings certificate. Post Office Savings Bank became National Savings Bank in 1969, later renamed National Savings and Investments (NS&I), an agency of HM Treasury. While continuing to offer National Savings services, the (then) General Post Office, created the National Giro in 1968 (privatized as Girobank and acquired by Alliance & Leicester in 1989). More recently, the Post Office Ltd. offers savings accounts based on its brand, and is operated by the Bank of Ireland, a commercial bank and Family Investments, a friendly society.

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