Millions of UK households are losing out on significant interest by leaving large sums of money in low-interest current accounts, according to new research. A survey commissioned by banking provider Chase found that 24% of people leave money sitting in current accounts at the end of the month rather than transferring it to a savings account. Of these, 17% have more than £5,000 in their current account, with men particularly prone to leaving cash idle.
The research, conducted by Opinium among 2,000 UK adults in November, revealed that many current accounts offer zero or minimal interest, meaning inflation can erode the real value of cash. Yorkshire Building Society analysis of Caci data suggested that over 12 million current accounts with balances exceeding £5,001 are likely earning 1% or less in interest. Separately, Spring Savings, a Paragon Bank app, estimated that £526 billion sits idle in current accounts, costing savers £20 billion annually in missed interest.
Shaun Port, managing director at Chase, said: "Every pound you save should be working as hard as possible for you." He highlighted the power of compounding interest, which allows savings to grow faster over time. Tina Hughes, director of savings at Yorkshire Building Society, added: "Millions are still missing out on easy wins – like earning interest on their savings."
For example, £5,000 in a best easy-access savings account paying 4.76% interest could generate around £243 in interest, compared to near-zero returns in a current account. However, many savers are not proactive: 10% say they have not moved money simply because they haven't got around to it, and 11% have no particular reason. Over 20% keep money in current accounts as a rainy-day fund for convenience.
The survey also found that 55% of people feel stressed about their finances, and nearly a quarter plan to use credit cards to cover costs. Derek Sprawling of Paragon Bank noted: "High street banks are offering little to no interest on savings whilst making it unnecessarily difficult to access better alternatives, resulting in the rise of 'current account coasters'."
