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Data reveals that 72% of easy access balances are receiving well under  the average easy access rate 

CACI data analysed by Paragon Bank revealed the true cost of inertia, after it showed that nearly three quarters of easy access account balances are receiving well under the average easy access interest rate.

Data from Moneyfacts’ monthly UK Trends Treasury Report showed that the average easy access rate remained consistent between March and April at 0.16%.

Despite this average, CACI data analysed by Paragon revealed that 72% of easy access balances, totalling £412.4 billion, earned a rate of 0.1% or less.

A total of 83% of all easy access accounts registered to CACI’s database, which analyses data from more than 30 UK savings providers, were earning a rate of 0.1% or less.

CACI’s view of savings stock has continued to grow throughout 2021, increasing from £953 billion to £965 billion between January and March this year.

This is in line with a trend noted throughout the pandemic, where CACI’s savings stock grew from £903 billion last March, a 6.9% increase year-on-year.

This has translated to the average easy access savings balance growing to £11,336 in March 2021, an increase of 10.6% year-on-year.

In contrast to the growth of easy access, fixed rate non-ISA accounts lost market share over the course of the first quarter of 2021, from 8.81% in January down to 8.23% in March.

Derek Sprawling, Savings Director at Paragon Bank, commented on the trend:

“We are seeing signs that the savings market is starting to pick up and that interest rates are on the up. Despite the fact the average interest rate for easy access is 0.16%, the vast majority of easy access balances are receiving a lot less than that.

“The large high street banks have kept their easy access rates consistently low for the last six months, while mid-tier and challenger banks have dominated the best-buy tables. Despite this, many savers are still opting to keep excess cash in a bank account linked to their current account. There are many factors influencing this – savers may perceive this as convenient or have given in to inertia in a low-rate environment.

“Many of those current account-linked savings products will be earning a rate of 0.01% or even less, so we would encourage savers to take the time to shop around if they are currently saving money in a linked account.

“Online providers, such as Paragon, are able to remain consistently competitive because they are nimble, specialised and don’t have the overheads of a branch network.

“Operating an account away from your main current account is simpler and more straightforward than many people think so it’s important to branch out and look at the most competitive options for your funds.”

 

For further information contact:

Leila Taleb - Media Relations Manager 

[email protected]