Millions of Savers Losing Hundreds Annually in Wrong Accounts
Financial experts have issued a stark warning that millions of people across the UK are losing approximately £360 each year simply by keeping their cash in the wrong type of bank account. This significant financial loss stems from holding money in non-interest or low-interest current accounts rather than moving it to higher-yield savings vehicles.
The Hidden Cost of Inaction
Derek Sprawling, head of money at Spring, highlighted that with inflation currently at 3%, £10,000 left in a non-interest current account could lose around £300 in real value over a single year. He described this as "the hidden cost of inaction," emphasizing that if money isn't earning at least the rate of inflation, it's effectively shrinking in purchasing power.
Spring's research reveals that approximately 6.5 million UK current accounts hold £10,000 or more, potentially losing value quietly when earning little or no interest. Sprawling urged households to reconsider how they manage their finances, suggesting they treat their main account like a "digital wallet" for bills only.
Expert Recommendations for Better Savings
Sprawling advised households to maintain a maximum buffer of £1,000 in their current accounts and move the remainder into accounts where they can earn substantial interest. "Think of your current account as your digital wallet – designed for convenience, not storage," he explained. "You wouldn't carry £2,500 in cash to the supermarket, so why leave it idle in a current account? Treat your current accounts as a flow-through space for your money."
Comparison Shopping Crucial for Better Returns
Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, supported these recommendations, noting that while top savings deals currently pay more than 4%, some major high street banks pay just 1% on their most flexible savings accounts. "Shopping around is wise," she emphasized.
Springall addressed potential consumer hesitation, stating: "There is an argument that, due to years of low interest rates and high inflation, consumers may feel it's not worth moving their money into a savings account, but that's not true." She stressed that even small percentage differences can translate to hundreds of pounds in additional interest annually.
The combined message from financial experts is clear: UK households should actively review their banking arrangements to ensure their money is working as hard as possible rather than losing value through inflation and missed interest opportunities.
