Easy access account balances continue to grow

The average easy access balance has continued its upward trajectory during lockdown and exceeded a record £11,000, according to analysis by Paragon Bank.
 
The specialist finance provider analysed CACI’s database, which considers savings data from more than 30 providers, and found that easy access average balances grew from £10,132 in January 2020 to £11,0921 in January this year.

At 9.5%, this growth is a third more than the easy access balance increase between January 2019 and January 2020, which was around 6.6%.
 
The Bank of England has estimated that £162bn has been saved since the first UK lockdown last March, and Paragon suggested that much of this balance growth has been made in easy access and current accounts.

Easy access balances now account for 58.7% of the savings market – excluding current accounts – which is up from 55.6% last January. Fixed rate non-ISA balances have reduced, and they now account for 8.8% of the market, down from 10.5% year-on-year. Paragon also cash ISAs have shown marginal growth and are now worth £292bn, which is an increase of 0.6% in the last year, compared to an increase of more than 4% the year before.

Paragon savings director, Derek Sprawling, commented: “We know that reduced expenditure during lockdown has created a nation of ‘accidental’ savers, with most people choosing to keep extra money in easy access or current accounts.

“There are numerous reasons why people have chosen to save in this way. While many will be making contingencies for a ‘rainy day’ by building an emergency fund, some might just be unsure what to do with their savings.

“Regardless of long-term saving goals, it’s important for people to move savings out of current accounts, where they may be earning zero interest, in order to receive at least some return. ISAs should also not be overlooked as they provide tax free income now and in the future.”

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