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£858.5 billion of adult savers’ cash now growing in real terms

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Over £850 billion of cash held in adult savings accounts is now growing in real terms after the rate of inflation fell in June, Paragon Bank analysis of industry data has revealed.

Paragon’s analysis of the latest CACI data1, which compiles savings data from 40 leading providers, shows £858.5 billion, or 75% of the total interest-bearing adult savings stock, sits in savings accounts earning 2.01% interest or higher.

Over half of that amount, £446.9 billion, is held in accounts earning 4.01% or more, boosted over the last 18 months by the uptake of fixed-term savings.

However, despite the Government’s official measure of inflation, the Consumer Price Index, falling to 2.0% in May2, £291.4 billion of adult savers’ money held in adult savings accounts is losing value in real terms as it sits in accounts earning 2.0% or below. 

If the cash held in non-interest bearing current accounts is included, that figure rises to £609.7 billion3.

Any savings account paying interest at or below that level means that the saver’s money is losing value in real terms because the price of goods and services is rising faster than the interest they earn on their account.

Conversely, cash held in savings accounts paying rates higher than the inflation rate increases the purchasing of those funds.

Broken down by product type, £350.5 billion earning 2.01% or more is held in fixed-rate accounts, with £480.4 billion held in instant access accounts. The remainder is held in a mix of notice and regular savings accounts.

By ISA split, £282.5 billion earning 2.01% or more is held in ISA accounts, with £576 billion held in non-ISA accounts.

Paragon Bank Managing Director of Savings Derek Sprawling said: “Savers have had to wait for a long time for their money to grow in real terms, but it's positive for them that through banks passing on increases in Bank Base Rate, and the switch to fixed-term products, nearly three-quarters of cash held in adult savings accounts is now increasing their purchasing power.

“However, if you combine money held in current and savings accounts earning 2% or below, that is over £600 billion losing money in real terms and seeing their purchasing power diminish. With so many savings accounts offering rates above 2%, savers should make sure their money is working hard for them.”

For further information contact:

Michael Clarke
Head of Media Relations
Paragon Bank

Notes to editors:

1. CACI’s  Current Account & Savings Database data from April 2024
2. https://www.ons.gov.uk/economy/inflationandpriceindices/timeseries/d7g7/mm23
3. CACI’s  Current Account & Savings Database data from April 2024

Paragon Bank PLC is a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £15 billion of assets under management, helping more than 340,000 customers to achieve their ambitions.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551.