More than 12 million current accounts in the UK are thought to be paying 1% or less in interest with balances above £5,001
People sitting on money in their current bank accounts have been issued a chilling warning. According to new research Yorkshire Building Society said more than 12 million current accounts in the UK are thought to be paying 1% or less in interest with balances above £5,001.
It means people are missing out on a chunk of interest – and potentially their money could be working a lot better for them. Speaking about festive spending Tina Hughes, director of savings at Yorkshire Building Society, said: “Christmas is usually a time of celebration, but this year many households are cutting back as budgets tighten.
“The number of people planning to spend over £1,000 has fallen dramatically. With household budgets under pressure and financial stress rising, it’s clear many are feeling the pinch.
“Yet millions are still missing out on easy wins – like earning interest on their savings . For many, that extra income could have easily covered the cost of Christmas, but for those without savings to fall back on, starting a regular saver now could mean a stress-free festive season next year – without relying on credit.”
The proportion of people planning to splash out this Christmas shrunk sharply compared with last year, the research suggests. On average, households expected to spend £596 this year, down from £774 in 2024, Yorkshire Building Society found.
The proportion planning to spend more than £1,000 plummeted to 15%, down from just over half (51%) last year. More than half (55%) of people in the latest survey said they feel stressed about their finances and nearly a quarter (24%) plan to use a credit card to cover the cost.
Among those borrowing, expectations around when they will clear their debt vary widely. Around half (51%) expect to clear festive debt within three months, while a quarter (24%) anticipate taking up to a year.
Opinium Research surveyed 2,000 people across the UK in November. The findings were compared with a previous Opinium Research survey of 2,000 people in September 2024.
Yorkshire Building Society also used analysis of Caci’s current account database for the research into interest on accounts .
Earlier this year research showed a staggering £526 billion is estimated to be sitting idle in current accounts earning no interest, data shows.
It means some 29 million people miss out on £20billion annually in interest by leaving money languishing in current accounts and not moving it to high-interest savings accounts, research conducted by Spring Savings, a new savings app launched by Paragon Bank, shows.
One in three people have £5,000 sitting in their current account, while the average current account balance is £2,067. Derek Sprawling, of Paragon Bank, says: “High street banks are offering little to no interest on savings while making it unnecessarily difficult to access better alternatives, resulting in the rise of “current account coasters”.”
The issue goes beyond just poor savings rates—a more fundamental challenge appears to be apathy among savers. Many individuals aren’t actively managing their savings or seeking out the best accounts to ensure their money grows as much as possible.
According to Paragon, one in ten people admit they leave money in their current accounts simply because they haven’t yet gotten around to moving it to a higher-paying savings account. Another 11 per cent report that they have no specific reason for not transferring their funds to a high-interest account.
Interestingly, just over 20 percent of people say they keep money in their current accounts as a rainy-day fund, suggesting that for some, the convenience of easily accessible funds outweighs the potential for better interest returns.
For savers who actively seek higher returns, the difference can be significant. For example, if £5,000 were placed in the best easy-access savings account paying 4.76 per cent interest, it could generate around £243 in interest. In contrast, the average current account balance of £2,067 would only earn around £175.56 if placed in the same high-interest account.
Clearly, savers are missing out on significant growth by not taking advantage of the best available interest rates.
