UK savers are leaving a third of their adult ISA and non-ISA instant access balances in accounts that are earning 1% or less in interest, despite the increasing rate environment, new research by Paragon Bank has revealed.

The bank has analysed the latest CACI data, which compiles the savings deposits of 34 providers of adult cash savings, and found that £250bn is currently held in instant access accounts earning 1% or less, representing 33% of instant access balances.

By volume, 38.6 million, or 59%, instant access accounts are earning 1% or less, which Paragon suggested highlights the poor returns many instant access savers are generating by not seeking out better rates.

Accounts with large balances are included in this group – 27% of all cash held in instant access accounts is earning 1% or less and has a balance of greater than £10,000. This equates to £205bn, meaning these accounts are missing out on significant rates of interest. By volume, it equates to almost one in every 10 instant access savings accounts, which equates to a total six million in the UK.

Overall adult savings balances ended the month £10bn higher than in March, at £1.05trn.

“Given rates have been increasing across fixed and instant access accounts for over a year now, it’s still surprising that over three in every £10 in an instant access account earns 1% or less,” said Paragon Bank director of savings, Derek Sprawling.

“What’s even more surprising is those individuals with significant balances of £10,000 or more in their account earning poor rates of return. I would urge savers to scour the market for better-paying accounts.”

He added: “Fortunately, we have seen a strong uptick in savers moving their money more recently, with many switching to fixed rate ISAs to protect their cash from tax. But, the amount still held in poor-paying accounts dwarfs that switching activity. With inflation remaining stubbornly high, it’s important that savers are rate savvy and make sure their cash is working hard for them.”

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