Nearly one in six new fixed and instant access adult savings accounts opened in the 12 months to August 2023 offered a rate of 1.5% or less, suggesting some savers still aren’t shopping around for the best deals, Paragon Bank analysis has found.

Paragon’s analysis of CACI data shows that 16% of new adult instant access and fixed-rate accounts opened in the 12 months to the end of August had a rate of 1.5% or below, equating to 1.8 million accounts.

By value, £28.3 billion was placed in newly opened adult fixed and instant access accounts earning 1.5% or below, with £26.5 billion of that placed in instant access variants.

CACI compiles the savings deposits of 35 leading providers of cash savings. A new account is classed as one that has been funded with at least £1 and has an open date within a specific month. Balances referenced are as at the end of the opening month.

Savers were far more likely to receive lower rates on instant access variants. Of the total number earning 1.5% or below, 96% were in instant access accounts.

At the opposite end of the scale, 3.9 million accounts were opened with rates paying above 4%. Of those accounts, 2.8 million were for fixed-rate deals, with £82 billion deposited.

In total, 11.3 million new instant access and fixed-rate adult accounts were opened and funded in the 12 months to the end of August 2023, with £281.3 billion placed in the accounts.

That was more than three times the amount deposited in new accounts for the same period the year before (September 2021 to the end of August 2022), when £83.3 billion was placed in 3.6 million new fixed and instant access accounts. Of those accounts, 78% of accounts were earning 1.5% interest or below.

Derek Sprawling, Paragon Bank Savings Director, said: “Whilst it is encouraging that savers are opening new accounts, nearly one in six accounts are earning relatively low rates of interest given the competitive rate environment of the past 12 months. The mantra of shop around for the best deal still applies in a higher rate environment, perhaps even more so given the premium some providers are offering on rates.”

He added: “However, we can also see the market is functioning. The doubling of new accounts opened compared to the 12 months before and the surge in balances deposited shows that many savers have responded to the more competitive rate environment.”  

For further information contact:

Michael Clarke
Head of Media Relations
Paragon Bank
07740090746
[email protected]

Notes to editors:

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.