Warning issued over ‘zombie’ bank accounts with thousands urged to ‘move money’A warning over has been issued over ‘zombie’ bank accounts costing you money amid changing interest rates from the Bank of England.
£280 billion is sitting in accounts paying zero interest, the latest data from the Bank of England (BoE) reveals. Laura Suter, director of personal finance at AJ Bell, said: “If you want one figure to sum up the apathy of the UK’s savers, it’s the fact that £280billion is sitting in these so-called zombie accounts earning absolutely no interest, at a time when interest rates are north of 5% for some savings accounts.
“The nation is missing out on millions of pounds of potential returns on their money.” The latest data from Moneyfactscompare shows some savings accounts are paying as little as 0.49% interest on minimum £1 deposits.
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However, there are a range of bank accounts offering rates over 5%. Laura added: “Even if the £230billion sitting in zero-paying accounts a year ago had earned a rather pedestrian 3% return on the cash in the past 12 months, it would have made the nation £6.9 billion richer.
“Not only is the money not earning any interest, it’s also being eaten away by inflation.
“While inflation has dropped from its double-digit highs, it is still chipping away at the spending power of your money each year.
“Keeping the money in your current account or an old savings account earning nothing is as good as stuffing it under your mattress – although admittedly the latter is probably a more comfortable option for sleeping at night.”
If you switch, remember your savings are safe – up to £85,000 is protected per bank or building society. Every bank or building society we mention in this guide is fully UK-regulated, which means you get £85,000 per person protection in the event it goes bust (£170,000 for joint accounts).
Money Saving Expert explains: “Surprisingly, some banks’ current accounts or their linked savers pay a higher rate of interest than most savings accounts, though you tend to only get interest on smaller amounts, often the first £4,000 or so.
“And unlike savings accounts, you’ll need to pass a credit check to open one.”