Crossed-up billions idle in minimal-interest bank accounts, gigantic amounts remaining untouched due to reduced savings interests.
Half a Trillion Pounds Remain Idle in Low-Interest Accounts, Analysis Shows
Over 29 million adults in the UK, accounting for 55% of the populace, are holding a combined total of £526 billion in current and savings accounts that yield little additional value for consumers, according to a recent assessment from Spring Savings, a division of Paragon Bank. This means collectively, customers are foregoing approximately £20 billion in lost interest by choosing to leave this cash untouched.
Spring Savings attributes this low-interest predicament to uncompetitive savings accounts offered by high street lenders. In April 2025, the average interest rate offered on easy access accounts by the top five high street banks, NatWest, Lloyds, Barclays, HSBC, and Santander, was mere 1.25%. This figure falls dramatically short of the most attractive savings account rates currently on the market.
Chase's Saver, for instance, currently offers more than two million customers a significantly higher 4.8% (variable) interest rate, including a 1.8% fixed boost for six months. Atom Bank's Instant Saver Reward easy access account also outpaces the 1.25% average, providing an interest rate of 4.75%.
Moreover, Spring Savings highlights that more than three-quarters of easy access savings accounts come with some limitations, such as bonus rates, stepped rates, or withdrawal restrictions.
While leaving money in low-interest accounts means that it isn't working as efficiently as it could, the issue intensifies as inflation slowly erodes the real value of the funds. Inflation eased to 2.6% in March 2025, but the UK has experienced high inflation rates in recent years, reaching a 41-year high of 11.1% in October 2022. Inflation remains above the Bank of England's 2% target.
Paragon Bank CEO, Nigel Terrington, argued, "For too long, high street banks have exploited customer loyalty by offering minimal interest on savings while making it overly difficult to access better alternatives. Many individuals keep their surplus cash in a savings account with their main bank, but these accounts come with some of the poorest rates available, costing consumers billions in lost interest year after year."
A related study revealed that more than £54 billion is being wasted in cash ISAs paying interest rates of 2% or lower, with over 96% of the total stash held in instant access options. Almost £52.4 billion of these savings balances are in easy access accounts, while £1.7 billion is kept in fixed-rate ISAs that pay no more than 2.0%.
Meanwhile, the best cash ISA rate currently stands at 5.71%, offered by the Moneybox Cash ISA. Plum's Cash ISA follows closely, with an interest rate of 5.06%. Derek Sprawling, managing director of savings at Paragon Bank, stated that these cash ISA savers can easily switch their funds into a better paying account and improve their earnings.
While savers protect their money from taxation by holding it within an ISA wrapper, Sprawling also acknowledged that many savers overestimate the complexity involved in switching a cash ISA. He encourages anyone receiving less than 2% interest to consider alternatives.
The guide available on our website offers a more detailed explanation of the process of moving ISA savings. By switching from low-interest savings accounts to competitive rivals, customers could significantly enhance their returns, potentially earning hundreds of pounds more in interest annually compared to low-interest accounts.
- Consumers in the UK's finance and personal-finance industry are collectively losing approximately £20 billion in lost interest, as over half of the population has £526 billion in low-interest accounts.
- The uncompetitive savings accounts offered by high street banks, such as NatWest, Lloyds, Barclays, HSBC, and Santander, contribute to this issue, with the average interest rate on easy access accounts being just 1.25% in April 2025.
- Alternatives like Chase's Saver with a 4.8% (variable) interest rate or Atom Bank's Instant Saver Reward easy access account with a 4.75% interest rate are available, but many easy access savings accounts have limitations or low rates.
