Savings accounts earning interest of 0.1% or less double during lockdown

UK savers put a record amount of money aside during May, but almost 40% of easy access balances are earning a rate of 0.1% or less, analysis from Paragon Bank has revealed.

Figures showed that easy access balances grew by £8.4bn in May, although savings balances earning a rate of 0.1% or less have nearly doubled since the UK lockdown came into effect.

Paragon stated that in February, 21% of easy access balances were earning 0.1% or less, adding up to a total of £104bn, and the bank’s data suggested this has steadily increased during lockdown and a total of £204.7bn is now earning a low rate of interest – 39% of all easy access savings.

The trend comes as easy access savings account balances in the UK have continued to swell during lockdown, with balances of easy access accounts growing by £19.5bn since February. The figure is almost four times more than the amount saved during the same period in 2019, which totalled only £5.4bn.

“The fact balances earning a rate of interest of 0.1% or less have doubled since the start of lockdown indicates that people have either given in to inertia or are unaware of the low rate on their easy access accounts,” Paragon director of savings, Derek Sprawling, commented. “Even when rates are low, it’s still important for people to shop around and seek the best deal on their savings.

“In today’s digital world, moving money around to get a better deal is easier than ever and managing a non-linked savings account is often more straightforward than people think. To facilitate this, we offer accounts across a range of access channels including online, telephone and postal services.”

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