Millions of Britons are being urged to check their bank statements after a stark warning revealed they could be missing out on hundreds of pounds in interest each year.
The £5,001 warning for current account holders
New research from Yorkshire Building Society has uncovered a major savings gap affecting households across the country. The study indicates that over 12 million current accounts in the UK are likely paying interest of 1% or less on balances exceeding £5,001.
This means a significant portion of the population is not earning a competitive return on money held in everyday banking accounts, despite rising living costs putting pressure on family budgets.
A missed opportunity for 'easy wins'
Tina Hughes, Director of Savings at Yorkshire Building Society, highlighted the issue, noting the particular strain many feel after the festive period. "Christmas is usually a time of celebration, but this year many households are cutting back as budgets tighten," she said.
"The number of people planning to spend over £1,000 has fallen dramatically. With household budgets under pressure and financial stress rising, it's clear many are feeling the pinch."
She emphasised that for countless people, the extra income from better savings rates could have helped cover Christmas costs. "Yet millions are still missing out on easy wins – like earning interest on their savings," Hughes added. She advised that starting a regular savings plan now could lead to a less stressful festive season next year, reducing reliance on credit.
Economic backdrop of falling interest rates
The savings warning comes in the wake of the Bank of England's decision to cut the base rate to 3.75% from 4% in December 2025. The central bank also projected zero growth for the economy in the final quarter of the financial year, revising its earlier forecast of 0.2% growth.
Governor Andrew Bailey cautioned about the risk of a "sharper downturn" ahead. Financial expert Martin Lewis commented on the rate cut on X, stating it was the lowest base rate in nearly two years and suggested "more rate cuts likely to come over 2026."
What the rate change means for your finances
Lewis outlined the immediate implications of the Bank of England's move for consumers:
Mortgages:
- Fixed-rate mortgages remain unchanged until the term ends. New fixed rates may drop slightly.
- Tracker mortgages will typically see a 0.25% point reduction.
- Variable and Standard Variable Rate (SVR) mortgages should drop by a similar amount, usually within a month. A 0.25% cut equates to roughly £15 less per month per £100,000 of mortgage.
Savings:
- Variable rate savings accounts, including most easy-access accounts, will likely see rates fall by 0.25% within two to four weeks.
- Fixed-rate savings deals have already factored in some of this cut, though they may decrease further. Lewis noted that if you want to lock in a rate, "the safest bet is do it today."
Credit Cards & Loans:
- Credit card APRs, which are already significantly higher than the base rate, are mostly unaffected, though slightly longer 0% deals may appear.
- Existing fixed-rate loans are unchanged. Rates for new loans may edge down marginally, but this process is slow.
The overarching message from financial experts is clear: in a climate of economic uncertainty and falling base rates, savers must be proactive. Reviewing where your money is held and seeking out competitive savings products is no longer a luxury but a necessity to protect your financial wellbeing.
