Are you one of the Brits missing out on £6.9bn of savings interest?
Britons lost out on an estimated £6.9bn in interest from savings accounts last year, a challenger bank has said, as personal finance experts urge consumers to be more proactive.
An total average of £235bn was held in non-interest paying current accounts over the course of 2023, according to an analysis of Bank of England data by specialist lender Paragon Bank.
The firm calculated that savers could have earned almost £7bn in interest if this money was transferred into non-ISA instant access accounts with an average rate in 2023 of 2.95 per cent.
This figure increases to £10.9bn if the money was put in last year’s average one-year fixed-rate bond of 4.65 per cent, Paragon said.
Consumers have been pouring more cash into no-interest current accounts since the Covid-19 pandemic, from £163bn in January 2020 to a peak of £249bn last June.
Savers are increasingly taking advantage of better savings rates. Data from consultancy CACI shows money held in adult fixed-term ISA and non-ISA accounts rose to £319bn in October 2023 from £161bn the previous year.
However, personal finance experts have urged savers to be more proactive as research shows nearly a quarter have never switched to a different savings account or opened an additional one, despite the record rates on offer for most of 2023.
“Whilst I appreciate that people like to keep some flex in their current account for everyday spending, the fact that balances have increased by approximately £70bn since the start of the pandemic shows that many people are simply leaving large amounts of money in their current account earning them no interest,” said Derek Sprawling, savings director at Paragon.