Published On: Wed, Mar 13th, 2024

Boost your savings by £435 a year with this simple switch – are you ‘throwing away’ cash? | Personal Finance | Finance

Britons have been urged to assess their as they could get an extra £435 a year with a simple switch.

Savers in the UK have an average of £8,311 held in current accounts. If the funds were put in an easy access account and cash ISA at 5.11 percent, they would earn £435 a year.

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “We’re throwing away more than £400 a year because we feel more secure sitting on a cushion of cash in our current accounts.

“The average household has £8,311 languishing there, and while we need some of it for essential spending, there’s every chance we’re keeping way too much to hand. Managing our cash better could leave us hundreds of pounds better off a year.”

Bank of England figures show households on average incomes have £4,792 in current accounts while those on the highest incomes have £16,891 in current accounts.

Even those who are aware of how interest rates work are leaving on average £8,668 squandering away in current accounts while those who don’t have £9,594.

Ms Coles said: “It seems that the more we know about our money, the less likely we are to leave the cash languishing.

“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 the impact of 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.

Ms Coles urged people with sizeable cash in their current accounts to do the sums to find out if they can afford to put more in their savings.

She said: “It’s worth working out exactly what you need, and moving the rest. If the thought of moving it over and back to your current account is holding you back – or limiting you to a savings account with the same bank as your current account, you can consider a cash savings platform, which lets you see everything in one place and switch between accounts in a handful of clicks.”

However, people may also want to look at putting some of their idle cash into investments as well as into savings accounts.

investment expert Clare Francis recently told : “There’s a role for both but when it comes to growing your money over the longer term, stock markets tend to produce better returns than cash.

“So if you keep all your money in savings accounts, it probably won’t be worth as much in 10 years’ time as it would be if you invested some of it.

“However, because stock markets fall as well as rise, there is risk involved which is why it’s important to always have some money in cash.

“Over time though, you’ll hopefully be able to ride out the stock market downturns and benefit from stronger returns overall. This is why investing can be well suited when it comes to things like saving for retirement or just a general goal of trying to grow your wealth for the future.”

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