UK savers missed out on more than £6.9bn throughout 2023 as a result of leaving their hard earned funds in standard current accounts earning no interest, according to research by MoneyAge.

Bank of England data shows that, on average, approximately £235bn was held in non-interest paying current accounts throughout last year.

If current account holders had put their money in a typical instant access savings account, with an average interest rate of 2.95%, they could have earned £6.9bn.If savers had utilised a longer term option, such as a one-year fixed rate bond, this return could have increased to £10.9bn based on an average rate of 4.65%.

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Shop around for better interest rates, in accounts that suit your needs

Our Managing Director, Matthew Pescott Frost, shares his thoughts:

“Banks make profits from borrowing from savers and lending to borrowers at higher rates. Unfortunately, the only certainty when investing into cash deposits is that over time, it will devalue due to rising inflation rates. It’s always best to shop around and source the best rate available to you, based on the level of access to the capital that you think you’ll need.

“Unless you’re saving for a specific purpose such as buying a house, I would not advise retaining more than 3 months’ net income in a deposit account. There are much better returns available elsewhere, and often in a more tax-efficient way for those who are prepared to invest into assets, such as stocks and shares, fixed interest or property.

“I’d always recommend speaking to a financial adviser if you’ve got money that you’d like to invest. For funds not required for 3 months, consider shopping around across banks. For medium and long term savings, I’d strongly advise seeking professional advice on asset-backed and tax-efficient alternatives. This may well include stocks and shares ISAs, and potentially increased contributions into your pension scheme.

“The goal should always be to prepare for the unexpected, coupled with a sound long-term financial plan that considers your tolerance for risk, your level of knowledge and your long term financial expectations.

“If you are one of these individuals who has money just sitting there not earning anything, then we’re here to help! Feel free to book in for a free consultation with one of our expert advisers to find out more about how we can help you to get the most out of your hard-earned cash.”

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