Around 62 million adults in the UK are earning 2.5% or less on their savings, meaning their money is losing real value as inflation outpaces interest rates, according to an analysis by savings app Spring.
A staggering £502 billion is held in adult savings accounts paying 2.5% or under, with the average balance in such accounts standing at £8,099. The analysis of CACI data also found that £437.2 billion is in accounts with more than £10,000, and £155.8 billion is in accounts with more than £100,000, meaning even those with larger sums are missing out on significant earnings.
Low Interest Rates Eat Away at Savings
Accounts holding more than £10,000 but earning less than 2.5% pay just 1.43% on average. Across all accounts with balances above £10,000, the average interest rate is only 2.91%. This leaves many savers watching the real value of their hard-earned money steadily erode as prices rise.
“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.”
Consider Moving Your Money
Sprawling added that while a competitive interest rate is important, 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.”
Some accounts pay around 5%, such as a recently announced savings product from Revolut available to new customers. Meanwhile, certain high street banks offer boosted rates for people who switch their current account.
