Shocking recent figures have shown that more than 250,000 adult cash savings accounts with £10,000 and above deposited in them are earning 1% or less.
This is despite a growth in savings rates and relatively high interest rates over the past two years and frankly it shouldn’t still be happening, but it is.
We typically aim to visit different topics in this column and not return to the same issues too often, but these figures are too big to be ignored and need to be highlighted.
These numbers follow analysis of CACI data by Paragon Bank, as reported by the website MoneyAge and its findings showed that 261,000 interest bearing adult accounts containing £10,000 or above were earning 1% or less in July 2024.
Meanwhile, more than 8,500 accounts with balances of £100,000 or above were earning that figure, rising to 42,700 accounts containing £50,000 or above.
In effect, these savers are losing out on £258million in savings interest each year.
The data revealed that £8.6billion is held in those 250,000 accounts, giving an average balance of £32,811. Based on 1% interest, the average account could expect to earn £328.11 in interest over a year, or £85.9m altogether.
But if that balance was moved to an account paying 4% – and yes, there are plenty of options out there – the interest would increase to £1,312.42 over the year, which is a collective total of £343.8m.
It gets worse when you consider inflation is currently 2.2% so at 1% interest, those account holders are literally LOSING money.
If this is you, or perhaps you know of a relative in this position, please PLEASE look at the other options available and seek professional advice from an IFA (Independent Financial Adviser) such as ourselves before you lose even more money!
There are several options available to you and to suit your circumstances. Cash ISAs may not be the best long-term investment option, but even they will offer you far more than you’re already getting, with some instant access ISAs currently offering up to 4.5% and others yielding above 5%.
The better rates tend to be fixed rate bonds, meaning you will not have instant access to your money, but that may suit your circumstances.
Over a longer term, something such as a Stocks and Shares ISA or Pension will generally give a better return, though these cannot be guaranteed and the value will fluctuate, but generally speaking, the longer you can invest it for, the better and more stable the outcome.
You can decide the level of risk you prefer and in any case, a wide-ranging portfolio of investments will spread that risk.
There are no guarantees, but the interest rate is likely to be cut again in November and will continue to fall if inflation goes down to 2% and stays there.
So those attractive fixed rates currently available may not be there forever.
Please do not lose money or allow your relatives to do so simply for the sake of a relatively simple transfer – with the cost of living and the entirely possible scenario of tax increases in areas such as Capital Gains Tax and Inheritance Tax looming, now is certainly not the time.
Do your research, speak to us, or at least speak to someone and put your money to better use!
