UK savers miss out on £6.9bn in 2023 by leaving funds in current accounts

UK adults missed out on an estimated minimum of £6.9bn in savings returns in 2023 by leaving their money in current accounts that do not pay any interest.

On average, £235bn was held in non-interest paying current accounts throughout last year, according to Bank of England data.

Based on the average non-ISA instant access interest rate of 2.95%, savers could have earned £6.9bn in interest if they transferred their current account deposits into an access savings account.

If that money was placed in the average one-year fixed-rate bond across the year of 4.65%, the return would have increased to £10.9bn.

Paragon Bank savings director, Derek Sprawling, commented: “Whilst it was pleasing to see many savers taking action to improve returns by switching to higher paying savings rates during 2023, it’s disappointing that over £200bn is still left in current accounts earning no interest at all. As a result, billions of pounds of interest is being missed.”

The level of cash held in non-interest paying current accounts increased during the COVID pandemic, growing from £163bn in January 2020 to £230bn by October last year. This figure peaked at £249bn in June 2023.

Despite the billions of pounds held in current accounts, however, savers were more proactive with their money in 2023, switching balances into fixed-rate accounts to take advantage of improved savings rates.

CACI data has revealed the amount of money held in adult fixed-term ISA and non-ISA accounts increased from £161bn in October 2022 to £319bn in the same month last year. Conversely, balances in adult instant access ISA and non-ISA accounts declined from £805bn to £730bn over the same period.

Sprawling added: “Whilst I appreciate that people like to keep some flex in their current account for everyday spending, the fact that balances have increased by approximately £70bn since the start of the pandemic shows that many people are simply leaving large amounts of money in their current account earning them no interest.”

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