People with £5,001 in bank account urged to make a change straight away

Over 12 million current accounts in the UK are paying 1% or less in interest on balances above £5,001, with millions missing out on better returns

A stark warning has been issued to those with cash sitting idle in their current bank accounts. Yorkshire Building Society’s latest research reveals that over 12 million current accounts in the UK, holding balances above £5,001, are believed to be earning a measly 1% or less in interest.

This means individuals are losing out on potential interest earnings – and their money could be working much harder for them. Discussing holiday spending, Tina Hughes, director of savings at Yorkshire Building Society, said: “Christmas is usually a time of celebration, but this year many households are cutting back as budgets tighten.

“The number of people planning to spend over £1,000 has fallen dramatically. With household budgets under pressure and financial stress rising, it’s clear many are feeling the pinch.

“Yet millions are still missing out on easy wins – like earning interest on their savings. For many, that extra income could have easily covered the cost of Christmas, but for those without savings to fall back on, starting a regular saver now could mean a stress-free festive season next year – without relying on credit.”

The research indicates a significant drop in the number of people planning to splurge this Christmas compared to last year. On average, households are expected to spend £596 this year, down from £774 in 2024, according to findings by Yorkshire Building Society.

The number of people planning to splash out more than £1,000 has nosedived to a mere 15%, a stark contrast from the 51% who were willing to do so last year. Over half (55%) of those surveyed admitted to feeling financial stress, with nearly a quarter (24%) intending to rely on credit cards to foot the bill.

Among those resorting to borrowing, there’s a wide range of expectations regarding when they’ll be able to settle their festive debt. Approximately half (51%) are optimistic about clearing it within three months, while a quarter (24%) foresee it taking up to a year.

Opinium Research conducted the survey in November, polling 2,000 individuals across the UK. The results were then compared with a previous Opinium Research survey involving another 2,000 participants in September 2024.

Yorkshire Building Society also incorporated an analysis of Caci’s current account database for research into account interest.

Earlier this year, shocking research revealed that a whopping £526 billion is estimated to be idly sitting in current accounts, earning no interest whatsoever.

This means that around 29 million people are missing out on a potential £20 billion annually in interest by letting their money stagnate in current accounts instead of transferring it to high-interest savings accounts, according to research conducted by Spring Savings, a new savings app launched by Paragon Bank.

One in three Brits are sitting on £5,000 in their current account, whilst the typical current account balance stands at £2,067. Derek Sprawling, from Paragon Bank, explains: “High street banks are offering little to no interest on savings while making it unnecessarily difficult to access better alternatives, resulting in the rise of ‘current account coasters’.”

The problem extends beyond merely poor savings rates—a more basic issue seems to be indifference amongst savers. Numerous people aren’t proactively managing their nest eggs or hunting down the top accounts to maximise their money’s growth potential.

Paragon’s research reveals that one in ten folk confess they abandon cash in their current accounts purely because they haven’t managed to shift it to a better-paying savings option yet. A further 11 per cent state they have no particular explanation for failing to move their funds to a high-interest account.

Fascinatingly, just over 20 percent of people claim they maintain money in their current accounts as an emergency fund, indicating that for some, the ease of readily available cash trumps the prospect of superior interest earnings. For savers who are actively pursuing higher returns, the difference can be substantial.

For instance, if £5,000 were deposited into the top easy-access savings account offering 4.76 per cent interest, it could yield approximately £243 in interest. Conversely, the average current account balance of £2,067 would only garner around £175.56 if placed in the same high-interest account.

Evidently, savers are losing out on considerable growth by not capitalising on the best available interest rates.