Brits missed out on an estimated minimum of £6.9 billion in savings returns in 2023 by leaving their money languishing in current accounts that do not pay any interest.
On average, £235 billion[1] was held in non-interest paying current accounts throughout 2023, according to Bank of England data.
Based on the average non-ISA instant access interest rate of 2.95%[2], savers could have earned £6.9 billion in interest if they transferred their current account deposits into an access savings account.
If that money was placed in the average one-year fixed-rate bond across the year of 4.65%[3], the return would have increased to £10.9 billion.
The level of cash held in non-interest paying current accounts increased during the Covid pandemic, growing from £163 billion in January 2020 to £230 billion in October last year. The figure peaked at £249 billion in June 2023.
Despite the billions of pounds held in current accounts, savers were more proactive with their money in 2023, switching balances into fixed-rate accounts to take advantage of improved savings rates.
CACI data[4] shows the amount of money held in adult fixed-term ISA and non-ISA accounts increased from £161 billion in October 2022 to £319 billion in the same month last year. Conversely, balances in adult instant access ISA and non-ISA accounts declined from £805 billion to £730 billion over the same period.
Paragon Bank increased savings deposits by 24.3% in the 12 months to 30 September 2023, ending the period at £13.3 billion, up from £10.7 billion at the same point last year.
Derek Sprawling, Paragon Bank Savings Director, said: “Whilst it was pleasing to see many savers taking action to improve returns by switching to higher paying savings rates during 2023, it’s disappointing that over £200 billion is still left in current accounts earning no interest at all. As a result, billions of pounds of interest is being missed.
“Whilst I appreciate that people like to keep some flex in their current account for everyday spending, the fact that balances have increased by approximately £70 billion since the start of the pandemic shows that many people are simply leaving large amounts of money in their current account earning them no interest.”
For further information contact:
Michael Clarke
Head of Media Relations
Paragon Bank
07740090746
Notes to editors:
1. Average non-interest bearing sight deposits Jan-Nov 23 – Bank of England Money & Credit Report
2. Paragon analysis of non-ISA instant access market rates Jan 1-Nov 30, rounded
3. Average whole of market Moneyfacts non-ISA one year fixed-rate bond Jan 1- Nov 30, rounded
4. CACI compiles the savings deposits of 35 leading providers of cash savings
Paragon Bank PLC a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £14 billion of assets under management, helping more than 340,000 customers to achieve their ambitions.
Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551.