British homeowners are keeping unprotected cash in their houses with a value of up to £5.6 billion, according to the Financial Services Compensation Scheme (FSCS).
The average left in each household is £218, excluding money kept in wallets.
This could have a potentially devastating impact on individuals who have their cash stolen or lost in a disaster as insurance companies only allow cover a small amount of money.
Cash kept under a mattress or locked in a safe also generates no interest, so consumers that do use their homes as makeshift banks are losing out on money.
One in ten of those surveyed were convinced that cash kept in their homes was safer than it would be in a building society or bank.
Mark Neale, FSCS chief executive, said: "If a bank or building society was to fail most customers would get their money back in less than a week, so there really is no need to keep it under the bed, in a jam jar or even, as one person told us, the handle of a fishing rod."
Even though interest rates are low at the moment, it is certainly better to be making money on your savings in a safe environment than at home where any number of things could happen to it.