More than a third of individuals are leaving £5,000 idle in bank accounts, missing out on earning interest - discover lucrative alternatives.
Ready to shake off that savings apathy and start earning some real interest on your cash? Let's dive into the truth about current accounts and why those hefty balances are just sitting idly, collecting dust.
It's shocking to learn that an estimated £526 billion is gathering moss in current accounts, earning zilch in interest [1]. This staggering figure represents a massive 29 million people who are missing out on a jaw-dropping £20 billion yearly by keeping their money parked in their current accounts instead of transferring it to high-yield savings accounts [1].
guess what? Around half of those with zero-interest current accounts could easily switch to high-interest savings options, but they just don't bother [1]. One in three people even has a cool £5,000 sitting in their current account, while the average current account balance is a relatively measly £2,067 [1].
As Paragon Bank launches their new savings app called Spring, aimed squarely at helping savers break free from their "current account coaster" slump and get better returns on their savings, it's time to take a closer look at why so many are keeping their money in current accounts.
First up, meager savings rates from big banks definitely play a role in the lack of enthusiasm around saving. Though the average easy-access account pays a respectable 2.78%, according to Moneyfacts, the big five high street banks only offer a mere 1.25% interest on their pure easy access accounts [1].
But there's more to it than just poor savings rates. Good ol' apathy from savers might just be a more fundamental problem when it comes to taking control of their savings and actively seeking the best account to help them grow as much as possible. One in ten people keep their money in current accounts simply because they haven't bothered moving it to a higher-paying savings account, while 11% just can't come up with a particular reason for not switching to high-interest savings accounts [1].
Just over a fifth of people are hoarding their dough in current accounts as a rainy-day fund [1]. But, oh, the opportunities they're missing out on! Savers would bag a hefty £243 in interest if they kept £5,000 in the best easy-access account, which offers a whopping 4.76% [1]. The average current account balance of £2,067 would grow to a reasonable £175.56 if kept in a high-yield savings account [1].
So, what's the deal with Spring, and how does it plan on changing this savings slump? Paragon Bank has rolled out an app-based savings account called Spring, offering a scorching 4.3% on easy-access accounts [1]. To savvy savers who are tired of navigating through their banking apps, Spring offers a refreshingly convenient solution. Once downloaded, the app allows savers to move their money from their current account to their Spring savings account without a hitch [1].
Though 4.3% is impressively higher than the average current account rate, it's important to note that you can still snag better rates with offerings like Chip's easy-access deal, which pays a stomach-turning 4.76% [1], or Atom's Instant Saver Reward, which offers the same jaw-dropping rate [1]. Spring's main appeal lies in the seamless transition from your current account to their savings account within the Spring app [1].
On a £10,000 deposit, a saver could earn a handsome £430 of interest over a 12-month period, assuming the rate remains constant [1]. Plus, unlike some top accounts, withdrawals are unlimited with Spring, so the rate won't drop if savers dip in and out of their savings [1].
Of course, there are a few caveats to be aware of. If you're the type to dip in and out of your savings frequently, tread carefully with Chip's easy-access account—make four or more withdrawals within 12 months, and your rate plummets to a less-impressive 3.75% [1]. Similarly, Atom's Instant Saver Reward account pays a respectable 4.75% for those who don't make a withdrawal; however, a single withdrawal cuts your rate to a dismaying 3% for that given month [1].
Money held in the Spring easy-access account is fully protected under the Financial Services Compensation Scheme, so rest easy knowing your cash is safe and secure [1]. Money is held with Paragon Bank, a licensed bank, and is used for lending activities [1]. However, bear in mind that if a customer is both a Spring and a Paragon customer, the FSCS limit of £85,000 applies across both accounts, so you won't enjoy double protection [1].
With 24/7 customer service based in the UK and an app-based experience, Spring makes it easy for savers to get started on their way to building wealth. Are you ready to kiss your current account coaster days goodbye and start making serious money work for you? Get started with Spring today.
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- By transferring their funds to high-yield savings accounts instead of keeping them in current accounts, savers could potentially earn an average of £20 billion annually, as a staggering £29 million people are currently missing out.
- Many savers could benefit from switching to high-interest savings accounts, yet around half of those with zero-interest current accounts don't bother to make the change.
- The average current account balance is £2,067, but those with as little as £5,000 in their account could earn an extra £243 in interest if they moved it to the best easy-access account, which offers a whopping 4.76%.
- Paragon Bank's new savings app, Spring, aims to help savers break free from their "current account coaster" slump by offering a higher interest rate than many high street banks, with up to 4.3% on easy-access accounts.
- Savers should be aware that while Spring offers a competitive interest rate, there may be better options available; for instance, Chip's easy-access deal pays 4.76%, and Atom's Instant Saver Reward offers the same rate, but these accounts come with certain withdrawal restrictions.
