British savers could earn an extra £233.68 per year simply by moving their money from low-interest accounts to higher-yielding alternatives, according to new analysis from digital wealth management platform Moneybox.
Millions Stuck in Low-Interest Accounts
There are 56.1 million low-interest savings accounts across the UK, earning an average of just over 1% interest. This is well below the current inflation rate of 2.8%, meaning the purchasing power of savings is eroding. An account holding the average balance of £7,168 would earn only £81.72 in interest over a year. To keep pace with inflation, that same balance would need to earn £200.70, leaving an annual shortfall of £118.98 per account.
Potential Gains from Switching
Moneybox found that moving the average £7,168 into an account earning 4.4% interest would yield £315.39 in interest annually. This represents an extra £233.68 compared to a low-interest account. In total, British savers risk losing £6.6 billion a year by keeping money in low-interest accounts, according to Headline Money.
Expert Advice
Cecilia Mourain-Jaquin, Chief Savings Officer at Moneybox, said: "As inflation remains stubbornly high in response to ongoing geopolitical tensions, it’s important to make sure your money is working as hard as it can. We all notice the prices going up at the checkouts, but many savings accounts are currently offering rates well above inflation, creating a valuable opportunity for savers to protect the purchasing power of their money."
She added: "Regularly reviewing your interest rate and making a simple switch if it is lower than inflation could make a world of difference. Ensure you take the time to shop around, as this will benefit you in the long run, and could be the helping hand you need to tackle any unexpected costs."
