Savers lose interest of £ 1 billion annually by leaving the cash in checking accounts
- The amount in bank accounts has increased by nearly 30 percent over the past year
- “Accidental savers” have benefited from much less spending during the pandemic
- The rates have decreased in the last year since the base rate was set at 0.1 per cent
Savers lose up to £ 1 billion in interest annually by leaving the cash in their checking accounts.
The amount in bank accounts rose nearly 30 percent as “casual savers” benefited from less spending in the epidemic.
The increase far exceeds the additional 18 percent directed at easy-to-access savings accounts.
The amount of cash deposited in bank accounts has increased by nearly 30 percent over the past year after “casual savers” have benefited from much less spending during the pandemic.
This means that there are now 235.5 billion pounds in checking accounts, as they are not earning any interest, as figures released by the Bank of England yesterday showed.
Further research reveals seven out of ten savers who managed to hide money in last year’s plan to continue to keep their epidemic savings in their checking accounts.
However, they can earn around £ 235.5m in interest by transferring their money to an average accessible account that pays 0.1 percent.
And if savers opt for a 0.4 percent better account, they can, together, get £ 942m – or just over £ 1bn at the highest rate of 0.45%.
Interest rates have decreased in the last year since the benchmark rate was set at 0.1 per cent. But they showed signs of persistence. Many banks pay 0.4 percent on their easy-to-access accounts, while spouses pay a bit more.
The Bank of England is not expected to raise interest rates when the Monetary Policy Committee meets on Thursday – but the board appears to have made another cut.
“The interest rate markets have identified a 25 per cent chance to raise the Bank of England benchmark rate from 0.1 per cent next year and discount the cut,” says Laith Khalaf, financial analyst at fund platform AJ Bell.
Although rates remain low, the economic picture is more optimistic thanks to the launch of the vaccine, along with the reopening of stores.
Keeping money in a checking account is fine because savers know they can access it easily. But the linked savings account can return the money to your checking account within two hours.
By transferring surplus funds to your savings account until needed, it is easier to keep the funds set aside for a rainy day separate from your daily spending.
Paragon Bank went to the top of the best tables by buying 0.41 percent in its easy-to-access limited edition account with a minimum of £ 1 in mid-April.
Last Friday, Kent Reliance raised the risk to 0.45 percent on £ 1,000 or more on its Easy Access account.
Banks at 0.4 per cent include Marcus by Goldman Sachs and Saga Savings Easy Access (both with a minimum of £ 1), RCI Bank Freedom Account (£ 100), Shawbrook Bank (£ 1,000), and Hampshire Trust Bank (£ 1,000). £) plus both Chartered Savings Bank and Investec with a minimum cap of £ 5,000.
Some providers, including Nationwide and Leeds BS, pay 0.4 percent, but they limit the number of times you can withdraw money from your account to three or four times a year.
Ignore the big banks – they pay 0.01 percent or 10 pence interest a year on £ 1,000.