72% of easy access balances earning less than 0.1%

Seventy-two per cent of easy access balances, totalling £412.4bn, are earning a rate of 0.1% or less, according to CACI data analysed by Paragon Bank.

Figures revealed that a total 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 £953bn to £965bn between January and March this year. This is in line with a trend noted throughout the pandemic, where CACI’s savings stock grew from £903bn last March, a 6.9% increase year-on-year.

Paragon noted that this has translated to the average easy access savings balance growing to £11,336 in March, reflecting an increase of 10.6% year-on-year.

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

Paragon savings director, Derek Sprawling, commented: “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.”

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