Nation’s cash sits idle in current accounts

Adults in the UK are collectively missing out on hundreds of millions of pounds in interest each year because they have billions of pounds lying idle in low paying current accounts.

New research by Sainsbury’s Bank estimates that up to 19 million adults in the UK have surplus money sitting in current accounts that only pay 0.1% interest. Across the UK, this represents a massive £13.6 billion that is generating only minimal returns.

If this money was transferred to a high earning savings account, like Sainsbury’s Internet Saver, which pays interest rates of 6% AER on balances of £1, it could realise an extra £801 million each year.

The research indicated that 2.87 million people with non-fee paying current accounts with one of the UK’s main four retail banks regularly have between £501 and £1,000 sitting idle in these accounts at the end of the month. A further 1.78 million people regularly have between £1,001 and £2,000 left in their account. However, the vast majority of these accounts only pay 0.1% AER interest. A person with a £1,500 surplus in such an account could earn £88.50 extra interest a year if they moved the money across to a high interest savings account paying 6%.

Peter Wood, Head of Savings, Sainsbury’s Bank said: “Our research indicates that there are millions of people who could be making their money work harder for them. Obviously, it is sensible to keep a surplus amount in your current account to ensure you don’t go overdrawn but many people have significant sums that they are not drawing upon. This money could be transferred to a high interest, easy access savings account or high paying current account that could earn them considerably more interest.”

Astonishingly, over 500,000 people admit that, after all their monthly outgoings have been accounted for, they have balances of over £5,000 sitting idle in current accounts likely to pay only 0.1% interest. For these people the losses are even more significant, with at least £295 in interest being missed out on over the course of a year.

Sainsbury’s Bank offers a choice of savings accounts, all of which are amongst the most consistently attractive. This includes its Internet Saver account, which pays 6% AER on balances of £1.