£246.5bn currently sat in savings accounts paying no interest

Around £246.5bn is currently sitting in UK savings accounts paying no interest at all, according to new findings from Hargreaves Lansdown.

The figure means that bank account holders could be missing out on more than £1.6bn a year.

Hargreaves Lansdown’s findings, based on a survey this month of 2,000 adults from across the UK about their savings attitudes and habits, revealed that half of all account holders (50%) have not switched savings account in the past five years, while 37% have never switched.

The most common reason revealed for not switching was that rates are too low to bother with (42%), followed by people trusting their bank so not wanting to leave (24%), and thinking a switch is too much hassle (17%).

Hargreaves Lansdown personal finance analyst, Sarah Coles, suggested that loyalty to banks and to savings accounts paying “miserable rates of interest” is costing savers billions of pounds.

“Even if we just switched the money collecting dust in accounts paying no interest at all we could make £1.6bn in interest, and if we switched those paying rock bottom rates in high street accounts, we could save billions more,” Coles said.

“It’s easy to see why people don’t think it’s worth the effort of switching while rates are so low. But rates have picked up in recent months, so if you’re earning next to nothing in a miserable high street savings account paying 0.01%, you could make 65 times the interest by switching to the most competitive easy access rate on the market, or 150 times the interest by tying your money up for a year.

“And this is only the half of it, because the longer you leave money languishing in an account, the lower the rate tends to drop. It’s one reason why we have £246.5bn sitting in accounts paying no interest at all.”

Coles also highlighted that the past few years have seen a trend in money being put into easy access accounts rather than fixed rate accounts.

She added: “While this is absolutely the right place for your emergency savings of three to six months’ worth of expenses, and any money you know you will need in the immediate future, it’s a missed opportunity for the rest of your savings.”

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