- We have an average (mean) of £8,510 in current accounts. If we moved that to an easy access account without restrictions, or a cash ISA, we could make 5.2%, which over a year could leave us £453 better off.
- The average household has £6,095 in cash ISAs. Moving from the average easy access cash ISA (3.35%) to the best on the market (5.2%) would leave them £117 better off.
- The average household has £13,850 in savings accounts. Most of this is in easy access accounts. If it was moved from the average easy access rate of 3.13% to the best on the market (5.2%), it would leave them £298 better off.
- That’s a total of £868.
- The fifth of people on the highest incomes have £17,356 in current accounts, so saving could leave them £924 better off in a year. They have £12,621 in cash ISAs, so moving would gain them £243 and they have £32,263 in savings accounts, so they could be £694 better off. That’s a total of £1,861.
- 52% people haven’t switched savings accounts in at least a year, and 50% have no plans to ever switch (Opinium survey for HL, April 2024).
All data from the HL Savings & Resilience Barometer July 2024, unless otherwise stated. Savings rates as at 5 August 2024.
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“We’re throwing away more than £800 a year each – and as much as £1,800 – because we’re letting our savings languish. We feel more secure sitting on a cushion of cash in our current accounts, where in many cases it’s earning no interest. Meanwhile, more than half of us (52%) haven’t switched our savings in a year and half have no plans to switch (50%), so it’s in savings accounts and cash ISAs paying a derisory rate of interest.
The average household has £8,510 languishing in current accounts, and while we need some of it for essential spending, there’s every chance we’re keeping way too much to hand. Managing our current accounts better could leave us hundreds of pounds better off a year.
The more cash we have, the more likely we are to be squandering the opportunity to make more of it. Higher earners have more in their current account. They’re also likely to have higher outgoings, so will keep more in these accounts to meet day-to-day costs. However, they may not need all of it, so it’s worth working out exactly what you need, and moving the rest.
Overall, there’s £254.3 billion sitting in accounts earning no interest at all. If we switched it into the leading easy access savings account, we could earn £13.54 billion in interest. It’s an eye-watering sum to be throwing away at a time when money is so tight.
But it’s not just money in current accounts that could be working much harder. Separate HL research shows that 52% of people haven’t switched their savings in a year, and 50% have no plans to switch at any time (Opinium survey for HL, April 2024). An awful lot of this money is sitting in easy access savings accounts and ISAs with high street banks. Even if you’ve tracked down a decent deal elsewhere when you first opened the account, the longer you’ve had money in there, the less competitive it will tend to be.”
Mark Hicks, head of Active Savings, Hargreaves Lansdown:
“We need to shop around for a better rate on savings and cash ISAs. It’s worth considering online banks and cash savings platforms, where rates tend to be better. Savings platforms have the added advantage that you can select a range of competitive savings accounts from different banks over different timescales, open them without rigmarole and manage them in one place. At the moment, HL has a cashback offer that makes the effective interest rates even more rewarding.”
About HL’s cashback offer
- New clients to the Active Savings can earn up to £150 cashback.
- Cashback payable to anyone that opens an Active Savings account before 26 September 2024, with £5,000 or more.
- Clients will receive a cash payment into their Active Savings account based on the opening value of assets opened in the cashback window.
The effective rate (AER) if you deposit £10,000 and receive £20 cashback
Easy Access before cashback 4.67% – after cashback 4.87%
3-month fixed rate 4.85% – after cashback 5.05%
6-month fixed rate 4.85% – after cashback 5.05%
One-year fixed rate 4.95% – after cashback 5.15%
Two-year fixed rate 4.66% – after cashback 4.86%
