More than a quarter of a million people with money in a savings account containing balances of £10,000 or over are earning one per cent or less despite the growth in savings rates over the past two years. As a result of not shifting their cash to a different account with a better return rate, savers are losing more than £250 million in lost interest.
Paragon Bank’s analysis of CACI data indicates that 261,000 interest bearing adult accounts containing £10,000 or over were earning one per cent or less in July 2024. Over 8,500 accounts boasting balances of £100,000 or above were earning that figure, rising to 42,700 accounts containing £50,000 or above.
Collectively, these savers are missing out on £258m in savings interest each year. By value, CACI data shows that £8.6 billion is held in the quarter of a million accounts, creating an average balance of £32,811.
Based on a one per cent interest rate, the average account could expect to earn £328.11 in interest over a year, or collectively £85.9m. If that balance was transferred to an account paying 4 per cent, the interest payment would increase to £1,312.42 over the year, or £343.8m overall annually.
Across the overall adult cash savings market, 2.3m interest bearing savings accounts are earning one per cent or below, equivalent to £10.1bn.
Commenting on the findings, Derek Sprawling, Paragon Bank Managing Director of Savings, said: “Given the range of providers paying generous rates of interest available across the market, it’s remarkable there are still savers with large balances still accepting returns of 1% or below.
“These savers are seeing their money shrink in real terms as their return remains below inflation and, collectively, are missing out on over £250 million in interest.
“The savings switch message can often get ignored by those with smaller balances, which can be understandable given the relatively small increase in returns, but those with sizable deposits have a real and genuine incentive to move their money.”