Many individuals tend to keep a portion of their funds in their checking accounts for emergency purposes. Surprisingly, a recent study has shown that a substantial 87% of current accounts in the UK do not yield any interest, despite holding significant balances.
Financial specialists caution that stashing money in a non-interest-bearing account could lead to a reduction in savings value due to inflation erosion.
Currently, with the Bank of England base rate at 3.75%, numerous savings accounts are offering returns of over 4%, providing an opportunity to make your money work harder.
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For many, the convenience of having funds in a current account is the primary reason. It offers immediate access, visibility, and ease of use via banking apps.
However, this convenience comes with a cost.
A study by savings provider Spring revealed that over a million UK current accounts hold more than £50,000 without earning any interest, amounting to approximately £116 billion lying dormant.
Even smaller balances are impacted.
For instance, an individual with £5,000 in a non-interest account could potentially earn around £225 annually by transferring it to a competitive easy-access savings account that pays 4.5%, as estimated by industry experts.
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