Brits with large sums of money in the bank are being warned they could be losing out on hundreds of pounds in interest every year. Nearly £32 billion is currently sitting in UK adult savings accounts earning 1% interest or less, according to a new analysis.
The research shows that a huge chunk of this, £24.5 billion, is held in accounts containing £10,000 or more, meaning those with the biggest savings are the most affected. Derek Sprawling, the head of money at savings platform Spring, said: “The scale of money sitting in accounts earning 1% or less is truly eye-opening. Savers with significant balances are seeing their money eroded by inflation, when it could be working much harder elsewhere.”
The number of people with money in low-rate accounts has also jumped sharply this year. At the end of January, fewer than two million accounts were earning up to 1% interest.
But by the end of July, that number had surged to eight million, experts at Spring said.
In just two months between the end of May and July, the balance in these low-rate accounts more than tripled, rising by 308% as some providers reduced their rates even further.
Mr Sprawling added: “While a small proportion of accounts hold the majority of these low-earning balances, millions of people are missing out on the benefits of switching to a more rewarding savings account without suffering meaningful downside.
“At Spring, we’re committed to helping people overcome the barriers by making it easy to move money and earn more, without losing access or flexibility.”
Spring said it analysed data from financial services firm CACI, which compiles market insights from the UK’s biggest banks and building societies. The company said many savers may not realise just how little interest they’re earning or how easy it is to switch.
The warning comes as inflation continues to eat away at the value of people’s savings, meaning money left in low-rate accounts is losing real-world value over time.
Spring says its own savings account currently offers a 4.11% AER rate with no withdrawal limits or fees, and 24/7 UK-based customer support.