Are you one of millions in the UK missing out on over £1,000 extra annual income?

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.”

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.

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.

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