Managing our cash better could net us hundreds of pounds of interest every year.
Our savings and resilience tool showed us that households in 2022 had an average of £8,267 in current accounts. Most current accounts don’t pay interest. If they moved £5,000 of that into an easy access savings account paying 5%, they could make £250 a year.
This figure assumes the interest rate will stay the same over the year, in practice easy access accounts can change their rate at any time.
Last September, our research showed around one in five savers keep at least some of their savings in a current account. When choosing where to hold our savings, one of the top considerations is how easy it is to access our money.
But we don’t need to lock it away to make our money work harder – instant and easy access savings accounts keep your cash handy, and still pay interest.
Easy access lets you withdraw within one working day, whereas instant access accounts let you withdraw straight away. Current accounts also let you withdraw straight away, as well as allowing direct debits and standing orders. Money in your current account is at risk if your debit card is stolen.
It pays to understand our savings
It seems that the more we know about our money, the less likely we are to leave our cash languishing. Those who said they can calculate interest had £1,389 less in their current account than those who said they can’t, because they know how much more it could be earning elsewhere.
Meanwhile, those who understood that inflation reduces the spending power of their money, appreciated the full cost of their money not earning any interest. They had on average £1,168 less sitting in their current accounts.
Higher earners are more at risk
For the fifth of people on the largest incomes, their current accounts held an average of £16,661. That means they’re missing out on even more potential interest. They’re also likely to have higher outgoings, so will need more in their current accounts to meet day-to-day costs.
However, they might not need all of it. It’s worth working out exactly what you need, and moving the rest.
This article isn’t personal advice. If you’re not sure if something is right for you, seek advice.
Some simple steps to get better savings returns
For those who really want to put their cash to work, there’s nothing stopping you managing your money to make interest throughout the month – shifting money to your current account in tranches as and when you need it.
In many cases this can be as simple as a couple of clicks in an app, so not an insurmountable challenge.
Solutions for the time-poor
Those who said they’re too busy to manage their money had an average of £9,317 sitting in current accounts. While those who weren’t had £7,624.
If being too busy to sort your savings is holding you back, it's worth exploring online options that make this easier.
Active Savings work with banks and building societies to bring different savings products into one place. It makes it easier to switch between products when you see something you like.
If you’re happy to lock your money away, you can also find consistently competitive fixed terms ranging from a few months to several years. All in the same account.
NEW – cash bonus available
Savings rates are still soaring – Active Savings can help you take advantage. And you could get a £25 cash bonus if you add £10,000+ to a fixed term of 6 months or longer. Act by 29 September. If you need more time to decide you can register for an extension on our website. Terms below.
Please note you can’t usually withdraw your money from fixed term savings until the term has ended. Before fixing, make sure to have rainy day savings you can access easily for emergencies.
This website is issued by Hargreaves Lansdown Asset Management Limited (company number 1896481), which is authorised and regulated by the Financial Conduct Authority with firm reference 115248.
The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised and regulated by the Financial Conduct Authority (firm reference number 915119). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money. Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).
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