Britons are losing hundreds of pounds a year by leaving savings in low-interest accounts that fail to keep pace with inflation, new data reveals. Analysis by savings app Spring, using CACI data, found £612.4 billion is held in accounts paying 3 per cent interest or less, while inflation runs at 3.3 per cent and is expected to rise further in 2026.
The average balance in these low-paying accounts is £8,812, covering 69.4 million accounts. Someone with £10,000 in a 1 per cent account would earn just £100 a year, compared with £382 at a competitive 3.82 per cent rate — a loss of £282 annually. For £20,000, the gap widens to £564.
Larger savers are also affected, with £538.9 billion in accounts over £10,000 and £185 billion in accounts over £100,000, all earning below 3 per cent. Rachel Springall, finance expert at Moneyfacts, said: “Loyalty does not pay, yet savers may feel like it’s not worth switching their account, or leave an old pot untouched.”
Clare Stinton, senior personal finance analyst at Hargreaves Lansdown, warned of the long-term impact: “If the interest you’re earning doesn’t keep pace with inflation, you’re losing spending power.” She noted that something costing £10 in 2016 now costs around £14. Over 15 years, £5,000 at 3 per cent grows to £7,837, versus £9,808 at 4.5 per cent.
Many high street banks still offer rates between 1 and 2 per cent, less than half the best available deals. Spring’s research found 31 per cent of savers stay with their current account provider out of habit, and 26 per cent worry about losing instant access. Derek Sprawling of Spring said: “A lot of savers are still being hit by a loyalty penalty.”
