Millions of people across the UK are being warned they are effectively losing money by keeping substantial cash sums in everyday bank accounts that pay no interest.
The Scale of the Problem
New analysis has revealed a startling figure: 6.4 million UK current accounts held balances of at least £10,000 while generating zero interest returns. The data, from Spring Savings, indicates that among these, a significant 323,000 accounts contained £100,000 or more.
On average, a colossal £315 billion was held in UK current accounts earning nothing last year, with £227 billion of that sitting in accounts holding £10,000 or more. Derek Sprawling, Head of Money at Spring, commented, “You would expect that these would mainly consist of small balances, but our analysis shows that there are a significant number of accounts that contain sizeable funds, accounting for more than 70% of the overall balance.”
Why Your Money is Losing Value
The core issue is the combination of zero interest and persistent inflation, which was running at 3.6 per cent. This means the purchasing power of static cash is being eroded over time.
“If you've got a large cash buffer sitting in one of these accounts, it will actually be losing value the longer it remains idle, due to the eroding effect of rising prices,” explained George Sweeney, a banking expert from the comparison website Finder.
Sprawling highlighted the missed opportunity: “Millions of current accounts contained an average balance of £35,000 last year, which could have been earning significant returns. If you’re holding £50,000 or £100,000, the missed interest quickly tops £2,000 and £4,000.”
The Smart Alternatives for Your Savings
Financial experts are unanimous in urging people to move these dormant funds. A simple switch to a competitive easy-access savings account is the most straightforward solution.
“A current account is for day-to-day spending, not long-term storage,” Sprawling emphasised. “Choosing a savings account that connects to a current account so you can transfer money in seconds and offers unlimited withdrawals, could provide a compelling alternative.”
For those with larger sums, an easy-access Cash ISA is a highly tax-efficient option. George Sweeney advised, “The smart move is to keep large cash balances in an easy-access cash Isa. You can put in up to £20,000 this financial year and next, before the limit drops for under 65s to £12,000 in April 2027.”
Making the move can have a tangible impact. For example, shifting £10,000 into a competitive account could generate roughly £400 in interest annually, helping to offset inflation and protect your savings' real value.
