UK residents could be earning more interest on unused cash in current accounts
A new study from Sainsbury’s Bank shows that millions of UK residents are letting extra cash languish in their current accounts earning next to no interest when they could place it in instant-access savings accounts that pay 6 percent or more interest or in current accounts that offer as much as 8 percent interest.
Figures produced by the bank show that residents of the UK have £13.6 billion in the low-interest current accounts, money that they aren’t using.
The head of savings for Sainsbury’s, Peter Wood, said that while it is sensible to keep an extra sum in a current account to make sure that one doesn’t become overdrawn, many people have much more than they need in their current accounts.
The study showed that up to 19 million UK residents have more money in their current account than is necessary. Among the findings are that 2.87 million individuals routinely have between £501 and £1,000 sitting unused in a current account.
Up to 1.78 million leave an extra £1,001 and £2,000 in their account, and as many as 500,000 often have £5,000 extra in their current account at the end of the month.
In a higher-interest current account or instant-access savings account, according to Mr. Wood, this money could be making much more interest on that money than they currently are.
Many of them could be making up to £295 or more each year in extra interest, according to the report from Sainsbury’s, which is a joint venture between J Sainsbury (LSE: SBRY) and the Bank of Scotland, which is part of HBOS (SLE: HBOS).