£268bn of household savings sitting in zero-interest accounts
Coventry Building Society analysed Bank of England figures to make the findings.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Around £268 billion of households’ money is sitting in accounts paying zero interest, according to analysis by a building society.
Coventry Building Society said around a fifth (21%) of households’ savings in flexible and easily accessible accounts is deposited in accounts where no interest is being paid.
At a time of high inflation, the real value of money sitting in 0% accounts is being eroded sharply.
While interest-paying accounts may not match inflation, they may at least offset some of its impacts.
The Society analysed Bank of England data to make the findings.
We expect money going into zero-paying easy access accounts to lower as savers shift money into higher rate accounts to maximise their savings pots
It said that, even with current pressures on households’ finances, the latest statistics show growth in the total amount of household savings held in current accounts, easy access, fixed-rate bonds and cash Isas in November compared with the previous month, now standing at over £1.73 trillion.
Jeremy Cox, head of strategy at Coventry Building Society, said: “As we enter the new year, rates of around 3% are readily available in the savings market and we expect money going into zero-paying easy access accounts to lower as savers shift money into higher rate accounts to maximise their savings pots.
“Higher rates also mean a higher risk of exceeding personal savings allowances.
“The current allowance gives basic and higher rate taxpayers a tax-free allowance for their savings income of £1,000 and £500 respectively, unless their savings are protected by an Isa.
“Isas provide a tax efficient way of saving £20,000 a year and we think the popularity of these accounts will grow as many savers make use of their annual Isa allowances this year.”