Brits missing out on £2bn of interest

• Brits losing out on £2bn of additional interest by leaving their savings in current accounts compared to saving in an easy access
• ISA Savvy savers should review all avenues to manage their savings

It’s one month to go before the end of financial year, the traditional time for savers to make the most of their current tax-free allowance and start thinking about their ISA (Individual Savings Account) plans for the year ahead.

Brits have continued to build on their savings pots with the nation stashing away £7.7billion[i] in January alone. Now more than ever with the current pinch on peoples’ living costs savers may be wondering how they can make their money work harder.

However, with UK interest rates still relatively low compared to historic averages and returns for cash savings increasingly difficult to find, Yorkshire Building Society suggests a quick fix for customers hoping to make their savings work harder.

According to the latest CACI data a huge £455billion is sat in current accounts, with the average balance at £5,600[ii] generating an average interest rate of 0.06%. ISAs could be one way to help Brits make the most of their savings. With many accessible ISA accounts currently paying around 0.50%, savers could be missing out on £2.0billion[iii] more interest a year by not switching their £5,600 current account savings into an accessible ISA.  With many limited access and Fixed rate ISA options available paying above 1% the amount of interest earned could also be doubled for those savers who don’t require immediate access to their money.

ISAs were developed to create a safe place to keep savings where the taxman couldn’t eat away at the interest. With the flexibility of ISAs improving massively overtime, ISAs are highly beneficial in that they are just like any other regular savings accounts. There is no need to lock cash away for extended periods of time to receive the benefits and, just like current accounts, savers can withdraw money whenever it’s needed.

Chris Irwin, Director of Savings at Yorkshire Building Society, said:

It’s no secret that savers are having a tough time at the moment with unfavourable market conditions, so making the switch from low paying current accounts into an accessible ISA is one way savers can make their money work harder but also support those who value access to their funds throughout the year.

With many people managing to put away extra savings throughout the pandemic, making those funds now work as hard as possible will be even more crucial in the current financial climate. There’s a lot of things that are out of savers’ control such as rising inflation, increases to energy and food prices - it’s important savers focus on elements they can control and think about how they can make their hard-earned cash go as far as possible. We are encouraging customers to review their savings and get the information they need to make their money work for them.

All information correct at time of publication.

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[i] Bank of England Money and Credit Report (January 2022)

[ii] According to CACI’s CSDB, Stock, December 2021

[iii] £445bn current account balances @0.06% = £269m.  £445bn @0.50% = £2.226bn.  £2.226bn-£269m = £1.957bn