Are your savings languishing in pitiful accounts? £366bn earning 1% or less
More than £366 billion is sat languishing in low interest accounts, with one in five people never having checked what their money is earning.
And 13 million Britons are estimated to be holding their savings in current accounts, according to data consultancy CACI and Yorkshire Building Society.
Current accounts are known for their poor interest rates compared to fix rate accounts. And yet 36% of people keep savings there, according to an Opinium survey of 2,000 people, carried out for the study in May.
For those current accounts holding more than £5,000, the average balance is £23,700.
Read more: NimbleFins Best Savings Accounts Guide
It's the first time in 16 years the Bank of England base rate has been above inflation, meaning money can now make money in a number of high street and challenger banks.
Yorkshire Building Society first published its research in January after finding £380bn was in low interest accounts. Although the total has fallen slightly, there are still millions of people who could make more on their cash.
Chris Irwin, director of savings at Yorkshire Building Society, said: “We started the year highlighting that keeping large amounts of funds in low-paying current accounts has become a costly mistake for millions.
“It’s encouraging to see that for a small number of people they have made moves to improve the situation, however, there is still an incredible amount of money not earning returns like they could be.”
Rachel Springall, a finance expert at Moneyfactscompare.co.uk added: “Loyalty does not always pay and the convenience of stashing cash in a current account means many savers are getting little to no interest. Interest rates have changed considerably over the past 12 months but if someone does not proactively switch, they could be losing money in real terms due to inflation.”
The NimbleFins Best Savings Accounts Guide, which is updated weekly with the best rates, found Oxbury Bank and My Community Bank are each offering 5.22% fixed rate on deposits of £1,000 or more.
But even for easy access savings, which could be favourable for those currently keeping money in their current accounts, there are some great deals to be had.
Ulster Bank is offering 5.2% and Chase Bank is offering 5.1% - both with no minimum deposit.
There are often higher rates for regular savings accounts which are useful for those with smaller amounts to save every month rather than a lump sum.
First Direct is offering its current account customers 7% for monthly deposits of up to £300. But it's worth remembering the interest you make will not be 7% on the final amount after a year, but it will gradually rise.
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