More than half of instant-access non-ISA savings accounts are still earning 0.5% or less, despite savings rates increasing in recent months.

According to analysis of data from CACI by Paragon Bank, which covered November 2022, 50.2% of easy-access non-ISA savings accounts by volume earn 0.5% or less, while one in 10 (9.8%) of accounts were earning less than 0.1%.

Paragon said the figure equates to 25.4 million individual accounts and, by value, £260bn languishing in bank accounts offering poor returns.

The average instant-access non-ISA balance is £12,465, according to the data, meaning a saver could earn £211.90 more per year if they switched from an account paying 0.5% to one paying 2.20%. This increases to £261.76 for balances earning less than 0.1% currently and £351.51 if the saver moves from a 0.1% account to a defined access account paying 2.91%.

Paragon savings director, Derek Sprawling, said: “In a low-interest rate environment, there wasn’t a huge incentive for savers to switch from poor-paying accounts, but those days are over and there is an opportunity to make a material difference today. This could translate to hundreds of pounds more in your pocket, which is much needed in these challenging economic times.

“Many savers will be aware of the cash incentives for switching their current account and hear about them in the media. A similar scale of upside is available switching savings.”

CACI compiles the savings deposits of 34 providers of adult cash savings. Overall, total savings balances held by the CACI contributors increased in November 2022, adding approximately £6bn to £1.02trn.

Fixed-term accounts saw the greatest increase, spurred by better rates on offer and more competition. The data showed that ISA fixed-term accounts grew from £82.3bn to £86.6bn and non-ISA fixed savings balances grew by £7bn to £85.6bn.

Paragon’s analysis also revealed the proportion of accounts containing up to £1,000 continued to fall during the month, finishing at 54.52%. This has reduced from 55.22% at the start of 2022 and down from 60.14% in January 2019.

Sprawling added: “You would imagine that people would be saving less as household budgets are squeezed, but our own research shows that some households have been choosing to save more to protect themselves in uncertain times.

“In addition, the increase in fixed-rate accounts has clearly made these more attractive to savers, acting as a driver of balance growth as investors balance risk and reward.”

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