A warning has been issued to bank customers who risk losing more than £500.
According to reports, millions of Brits are flushing away over £500 a year by leaving their cash rotting in low-interest “zombie” bank accounts.
New research reveals more than half of UK savers are hoarding their hard-earned cash in zero-interest current accounts.
The research, by Opinium for Hargreaves Lansdown, found 56 per cent of savers are putting money in accounts that give them absolutely nothing back – a 20 per cent rise from last year.
67 per cent of 18–34-year-olds admit to stashing savings in current accounts, rather than moving them to proper savings pots.
81 per cent of higher-rate taxpayers and 83 per cent of investors are also making the same mistake.
£297bn is currently held in accounts earning no interest – up by about a fifth in a year. £3,365 is the average amount held in current accounts, rising to £10,180 for the highest earners. £114 is what the average saver loses in spending power after one year at 3.5% inflation, or £344 for higher earners.
Researchers calculated that if you had the average of £3,365 savings in a current account, and inflation was running at 3.5%, after a year, your money would have the same buying power as £3,251 today – so it would have lost £114 of spending power.
But if you moved the cash to a competitive easy-access account, you could earn a return that’s higher than inflation.
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Sarah Coles, personal finance boss at Hargreaves Lansdown, said: “You don’t have to transfer cash from another account in order to spend it, you just spend as normal – and find yourself eating away at your savings.”
Ms Coles said: “With inflation around 3.5%, a household holding £3,365 in a zero-interest account would lose £114 in spending power in just one year.” Those sitting on £10,180 would lose £344 annually – and over five years, £3,365 could shrink by £532.
She added: “These sites let you track everything in one place – and snap up the best rates without drowning in paperwork.”