Experts have issued a warning to savers as millions are earning much less than they could be. Different savings providers offer varying products with a wide range of rates, with market leaders offering as much as 7%. However, around 62 million adults in the UK are earning 2.5% or less. It means that, in real time, they are losing real value as their interest rate fails to keep pace with rising prices.
An analysis of CACI data by savings app Spring revealed that a staggering £502 billion is currently held in adult savings accounts earning 2.5% and under. Meanwhile, the average account earning less than 2.5% has a balance of £8,099. Spring found £437.2 billion is held in accounts with more than £10,0001, and £155.8 billion is held in accounts with more than £100,0001, meaning even savers with larger sums are losing out on serious earnings. It is worth savers looking at their forgotten money (money they have stashed away and don’t often think about), and considering if it is better placed elsewhere.
The analysis found that savings accounts holding more than £10,000 but earning less than 2.5% interest pay just 1.43%. Additionally, across all accounts with balances above £10,000, the average interest rate is still only 2.91%.
“Today’s figures are a timely reminder of a growing challenge for savers,” said Derek Sprawling, Head of Money at Spring.
More than 10 million savings accounts with balances of over £10,000 are earning less than the rate of inflation, paying an average return of just 1.43%. That excludes money sitting in current accounts, which often pays no interest at all. For many people, the real value of their hard-earned savings is being steadily eroded by rising prices.”
He added: “A competitive interest rate is important, but it should not be the only consideration. Savers should also think about how easily they can access their money when an unexpected bill or important life moment arises. The right account should offer a strong return while giving people the flexibility and reassurance that their savings are there when they need them.”