Britons miss out on £400 savings boost with simple change

Britons are missing out on £400 a year by leaving cash in current accounts when they could be put into savings, a group has found.

Researchers at Hargreaves Lansdown found the average household has £8,267 in current accounts when this could be put into an easy access account and boost a person’s savings by more than £400 a year.

Sarah Coles, head of personal finance at the group, said: “We’re throwing away more than £400 a year because we’re so keen to have cash at our fingertips.

“The average household has £8,267 sitting in current accounts, and while we need some of this for essential spending, there’s every chance we’re keeping too much to hand, and managing our cash better could net us hundreds of pounds in interest every year.”

If a household put the average £8,267 in a Shawbrook Easy Access Issue 36 account, they would earn £417 in a year.

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Households on average income have on average £5,118 in current accounts while those on the largest incomes have £16,661 held in current accounts.

However, savers who are more aware of how the system works tend to be more careful with their money.

Research found those who can calculate interest rates have £8,526 in current accounts while those who don’t have £9,915 on average in current accounts.

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Savers who understand how inflation eats into the value of their savings have £8,747 in current accounts compared to £9,915 for those who don’t.

Ms Coles said: “Those who can calculate interest rates are more likely to appreciate the cost of leaving money in their current account, so there’s a better chance of them switching some into savings.

“Meanwhile, those who understand inflation appreciate the full cost of leaving money somewhere it doesn’t earn any interest, so are less likely to have large sums in their current account.

“However, it also seems that the more cash we have, the more likely we are to be squandering the opportunity to make more of it.”

She encouraged people who want to get the most out of their cash to look at how they manage their money, such as by shifting money over to their current account in tranches as and when they need to spend it.

Ms Coles added: “In many cases this can be as simple as a couple of clicks in an app, so it’s not an insurmountable challenge.

“However, it may be enough to put some people off – it’s perhaps one reason why those who say they’re too busy to manage their money have an average of £9,317 sitting in current accounts, while those who aren’t have £7,624.

“If being too busy to manage your savings is holding you back, it’s worth exploring cash savings platforms, which let you see everything in one place and switch between accounts in a handful of clicks.”

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