If you’re one of them, here’s what you should know
A warning has been issued to Brits who have with £5,000 in their bank accounts, as a quarter of people leave money sitting in their current accounts at the end of the month, a new study has found.
According to a survey, 24% of people leave money sitting in current accounts at the end of the month rather than transferring it into a savings account.
Individuals could risk seeing inflation diminish the real value of their cash, as many current accounts offer zero or minimal interest.
In this group, one in six (17%) leave more than £5,000 sitting in their current account, with men being especially prone to leaving large sums of cash not earning interest.
The survey was commissioned by banking provider Chase.
“Every pound you save should be working as hard as possible for you”, Shaun Port, managing director for daily banking and savings at Chase, said.
A simple step that can make a real difference and help your savings grow faster and bringing your goals within reach, is if you move your money into a higher paying interest account.
“We know consumers feel proud and motivated when they see their money moving in a positive way”, Port added.
“Compounding interest is a powerful tool that allows your savings to grow faster over time. The main advantage is that you earn interest not only on your original deposit but also on the interest that accumulates, creating a snowball effect.
“This means your money works harder for you, and even small amounts can grow significantly if left untouched. When you create a positive habit, consistency follows.”
In the UK, over 12 million current accounts with balances exceeding £5,001, are likely earning 1% or less in interest, as per research from Yorkshire Building Society.
Earlier this year, research revealed a staggering £526 billion is estimated to be sitting idle in current accounts earning no interest.
And research conducted by Spring Savings, a new savings app launched by Paragon Bank, showed that around 29 million people miss out on £20 billion annually in interest by leaving money dormant in current accounts and not transferring it to high-interest savings accounts.
One in ten people confess they leave money in their current accounts simply because they haven’t yet managed to transfer it to a higher-paying savings account, according to Paragon.
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