Millions of people could be missing out on almost £1,000 extra income a year because their savings are in low- or no-interest paying current accounts, analysis from Yorkshire Building Society and CACI suggests.
There are nearly 13 million current accounts held in the UK with balances above £5001, and of those people who hold at least £5,001 in their current account, the average balance held is £24,500.
Almost £400bn is being held in current and savings accounts earning 1% interest or less, but people’s lack of understanding of the impact of their savings habits means millions are losing out on potentially thousands of pounds in interest.
Research also completed by Yorkshire Building Society suggests that over half of savers haven’t compared the interest paid on their accounts in the last year, and over a third hold most of their savings in a current account, offering little or no interest.
Chris Irwin, director of savings at Yorkshire Building Society, said: “Despite savings interest rates getting a lot of attention over the last year, following the significant increases in the Bank Rate, it’s surprising that there are still large pockets of people who are significantly missing out on savings interest – shopping around can now make a substantial difference to the returns available.
“Keeping large amounts of funds in low paying current accounts has become a costly mistake for millions. It’s understandable to want to have money accessible for emergencies or even topping up everyday expenses, but with so many instant access savings accounts currently available in the market paying a much higher return, there has never been a better time to review the home of your savings.
“Reviewing finances and savings can sometimes be an afterthought, with other things in life taking priority, however the start of a new year provides the perfect opportunity to take a close look at your finances and increase awareness of your situation and from there look at how you could make small changes which add up to much bigger returns.
“It doesn’t matter how you choose to go about it, but making just one positive change to your finances, could make a big difference in the long-term.”
