Consumers urged to consider switching as £400bn languishes in low-interest savings accounts

Britons are keeping nearly £400bn in current and savings accounts earning just one per cent interest or less, according to new research, as savers are urged to shop around for the best deals.

The average easy access savings rate on Thursday was 3.16 per cent, while the average one-year fixed savings deal is 4.75 per cent, according to financial information website Moneyfacts.

Research by Yorkshire Building Society and data consultancy CACI showed an estimated £380.9bn is languishing in current accounts paying between zero and one per cent and instant access non-Isa savings with rates of 0.01 per cent to one per cent.

It suggested there are almost 13m UK current accounts with balances in excess of £5,001.

Personal finance experts have urged savers to be more proactive as research last week showed nearly a quarter have never switched to a different savings account or opened an additional one, despite the record rates on offer for most of 2023.

The majority (55 per cent) of savers have not compared savings rates in the past year, an Opinium survey of 2,000 Britons commissioned by Yorkshire Building Society also found.

Nearly half (49 per cent) of respondents said they had eaten into their savings in the past year, with people on average feeling they needed to be able to access £4,000 immediately.

Just 53 per cent of savers said they were happy with their provider.

“Keeping large amounts of funds in low-paying current accounts has become a costly mistake for millions,” said Chris Irwin, director of savings at Yorkshire Building Society.

“It’s understandable to want to have money accessible for emergencies or even topping up everyday expenses, but with so many instant access savings accounts currently available in the market paying a much higher return, there has never been a better time to review the home of your savings.”

Rachel Springall, finance expert at Moneyfacts, said: “Loyalty does not always pay on savings accounts and the convenience of using a current account is costing consumers in interest they could earn elsewhere, as many bank accounts pay little or no interest.”