Advertisement

Image of Ella Mower

Ella Mower

Senior Content Writer
Published: 19/01/2024
Looking for higher returns on you savings? | Person emptying piggybank

Consumers are missing out on the opportunity to maximise their returns, with over half of savers admitting to not comparing interest rates in the past year.

Millions of people in the UK are potentially missing out on over £1,000 extra income a year as they let their money sit in low-paying or no-interest savings and current accounts, reveals analysis from Yorkshire Building Society and CACI.

Despite market-leading savings accounts currently paying in excess of 5.00% AER, this analysis found nearly £400 billion is held in UK current and savings accounts earning returns of 1.00% or lower.

With research suggesting over half of savers haven’t compared the interest paid on their accounts in the past year*, Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said it’s ‘worrying’ to see consumers missing out.

“Loyalty does not always pay on savings accounts and the convenience of using a current account is costing customers in interest they could earn elsewhere, as many bank accounts pay little or no interest,” Springall added.

“It is vital consumers shake any apathy by comparing the latest savings rates and moving their money to grab a better deal.”

Compare the best savings rates

Our dedicated savings charts are regularly updated throughout the day to bring you the latest leading rates. You can use our charts to compare the best easy access accounts, fixed rate bonds and notice accounts on the market.

How you could earn over £1,000 extra a year

Over a third of savers admitted to holding most of their savings in a current account offering little or no interest, found research commissioned by Yorkshire Building Society.

Furthermore, nearly 13 million current accounts in the UK hold balances above £5,001, according to CACI’s Current Account & Savings Database. Across these current accounts, the average balance stands at £24,501.

Applying CACI’s Rest of Market Current Account average interest rate for these accounts (0.05%), the total amount of interest earned on £24,501 in a year is roughly £12.

Meanwhile, if you were to apply the market-leading easy access rate to this balance (5.20% AER at time of writing), the amount of interest you could receive jumps to £1,274 in a year – an increase of over £1,000.

“Keeping large amounts of funds in low-paying current accounts has become a costly mistake for millions,” recognised Chris Irwin, Director of Savings at Yorkshire Building Society.

“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.”

 

Tax-free savings

However, switched-on savers may note earning over £1,000 in additional interest each year will likely see them breach their Personal Savings Allowance.

In this case you may want to consider moving your money to an ISA instead.

The market-leading easy access ISA currently pays 5.09% AER (which includes a 0.94% bonus for the first 12 months). If you were to deposit the maximum amount permitted under the annual ISA allowance, at £20,000, you could earn up to £1,018 in tax-free interest within a year.

Compare the best ISA rates

Just like with our savings charts, you can use our dedicated ISA charts to compare the best easy access, fixed rate and notice ISAs on the market.

Not sure how much interest you’ll receive? Our lump sum investment calculator can help work out how much interest you could earn on your savings. If your account isn’t paying competitive returns, it could be time to shop around.

Lump Sum Savings Calculator

Press for help tip
£
Press for help tip
Press for help tip
Your Result

* Research conducted by Opinium Research completed 24-27 October 2023 with 2000 National Rep UK Adults, Commissioned by Yorkshire Building Society

Disclaimer

Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. Moneyfactscompare.co.uk will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.

Moneyfactscompare.co.uk will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by Moneyfactscompare.co.uk will always be from news@moneyfacts-news.co.uk. Be ScamSmart.