The balance of easy access accounts earning a rate of 0.1% or less has almost tripled since January, according to new analysis by Paragon Bank, with 56% of easy access balances now earning a low rate.

CACI data analysed by Paragon revealed that balances earning less than 0.1% have steadily increased this year, having grown from 19% in January.

Easy access accounts earning a low rate grew to 34% in April, and 40% in June, before the greatest rise between August and September when low-interest earning balances grew by 14 percentage points from – 42% to 56%.

Paragon suggested that UK savers injected an additional £53bn into easy access savings between January and September. During the same period in 2019, there was an increase of only £17bn.

The research also showed that the total easy access balances earning a rate of 0.1% or less now stands at £313bn, which Paragon said represents “millions of pounds worth of lost interest”.

“The value of easy access stock receiving a rate of 0.1% has now tipped over 50% for the first time this year, with a steep increase in September,” commented Paragon savings director, Derek Sprawling.

“The timing aligns with a rate reduction announcement made by a government-backed provider. This caused significant market disruption, leading to deposits flooding out into the market at an unprecedented rate.”

According to CACI data, which provides data from more than 30 saving providers, the savings market has grown twice as fast this year compared to 2019, with a 5.99% increase in total balances noted between January and September 2020 – compared to 2.78% last year.

Most of this increase can be attributed to non-ISA easy access accounts, Paragon highlighted, which have seen their growth triple compared to last year. In 2020, instant access non-ISA stock grew by 10.3% between January and September, while it increased by only 3.6% during the same period last year.

Sprawling continued: “The data also suggests that many savers have given in to inertia. People are likely to be opening accounts linked to their current account for ease of access, but those often pay a lower than average rate of interest.

“In today’s digital world, opening and servicing a non-linked savings account is often easier than people think. Moving money from the large high street banks has never been easier so we would encourage savers to look for the best deal for their money.”

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