Third of Individuals Hold £5,000 in Current Accounts Without Earning Interest - Could This App Offer a Solution?
Get a load of this! Over £526 billion is frittering away in current accounts, earnin' zilch interest, according to data. Yep, you heard it right. That's the hard-earned cash of 29 million folks missin' out on £20 billion annually, just coz they ain't movin' their dough to high-interest savings accounts.
Paragon Bank, the geniuses behind this revelation, reckon a good chunk of these skint folks are keepin' their cash in current accounts simply coz the big banks are offerin' meagre returns. The average easy-access account pays a pathetic 2.78%, but the big five high street banks offer an abysmal 1.25% on pure easy-access accounts. Derek Sprawling, from Paragon Bank, ain't impressed: "High street banks are offerin' nothin' but pennies on savings while makin' it difficult for customers to find better alternatives, resultin' in the rise of 'current account coasters'."
It ain't just poor savings rates that keep folks from crackin' open a savings account, though. Apathy and pure laziness seem to be the real culprits. One in ten people admit they ain't moved their cash coz they ain't got round to it, while 11% ain't got a soddin' clue why they ain't done it yet. Just over a fifth of people claim they're keepin' their dough in current accounts as a rainy-day fund, but they'd stand to make £243 if they stashed £5,000 in the best easy-access account payin' 4.76%.
Paragon Bank has seen the light and launched a new savings app called Spring to help savers kick their apathy to the kerb and get better returns on their cash. If you download the app, you can sank your savings into an easy-access account payin' 4.3%. Unlike traditional savings accounts, movin' your money around won't get ya penalized, and withdrawals are unlimited. Mind you, there are some caveats. Chip's easy-access deal pays 4.76%, so you might find better rates with them, and savers who dip in and out of their savings regularly on Atom's Instant Saver Reward might find their rate drops to 3%.
The money held in the Spring easy-access account is fully protected under the Financial Services Compensation Scheme, just like any other savings account. But, if you're a customer of both Spring and Paragon Bank, the FSCS limit of £85,000 applies across both accounts, so you won't get double the protection.
Spring offers 24/7 customer service, and their customer service team is based in the UK, so you can get help whenever you need it. If you're lookin' to save some cash, Spring might be worth a look. Just remember: every little helps!
Now, you might be wonderin' why so many folks are keepin' their cash in current accounts instead of savings accounts. Here's the skinny:
- Convenience: Current accounts offer instant access to funds, which is handy for daily transactions, bills, and emergencies.
- Financial habits: Some people might not be aware of the benefits of high-yield savings accounts or might not see the need to switch from their current accounts.
- Incentives: Lower interest rates might discourage people from movin' their cash, especially if they don't need immediate access to their funds.
New savings apps like Spring aim to bridge the gap between the convenience of current accounts and the higher earnings potential of savings accounts. They offer tools to help users understand the benefits of savings accounts, make it easy to switch, and provide promotional incentives to encourage savings.
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Finally, if you're lookin' to save some cash, learn somethin' about Isas, fixed energy bills, fee-free Isa investing, and more with our handy guides. You're welcome!
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- High-interest savings accounts could earn savers an additional £20 billion annually, as over £526 billion currently lies idle in current accounts, accumulating little to no interest.
- Banks like Paragon Bank suggest that many individuals fail to move their funds to high-interest savings accounts due to banks' low savings rates and the difficulty in finding better alternatives.
- Although laziness and apathy contribute to low savings rates, one in ten people admit they haven't moved their money because they haven't gotten around to it, and 11% are uncertain about the reasons for inaction.
- If someone deposits £5,000 into the best easy-access account paying 4.76%, they could make £243 more than if they kept the money in a current account.
- A new savings app called Spring, launched by Paragon Bank, helps individuals overcome apathy, navigate the landscape of savings options, and earn better returns on their savings without penalties or withdrawal limits.
