Brits leave £31.6 billion in savings accounts paying 1% interest or less – do you need to switch?

Tens of billions of pounds have been left languishing in savings accounts that earn paltry interest rates, meaning hoards of cash are slowly losing value in real terms, new research has revealed.

Around £31.6 billion are sitting idle in UK adult savings accounts earning 1% interest or less, with savers missing out on hundreds from interest payments, according to savings app Spring, a part of Paragon Bank.

The best easy-access savings account on the market, currently the Zopa Smart Saver, has an interest rate of 4.75% for the first 12 months.

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The rise in the overall balance of accounts earning 1% or less in interest surged by 578% (over £27 billion) between January and July this year.

Meanwhile, the number of individual accounts with such low interest rates rocketed by 370% to eight million by the end of July. This is up from just under two million at the beginning of 2025.

The strikingly low interest rates on these accounts mean the savings are not keeping up with inflation and therefore losing its purchasing power.

The annual rate of inflation in the UK in September was 3.8%, remaining at July’s 18-month high.

While inflation has been far above the Bank of England’s target of 2% for most of 2025, even if price growth was kept under control, these accounts would still see their balances erode by around 1% a year in real terms.

Derek Sprawling, head of money at Spring, said: “The scale of money sitting in accounts earning 1% or less is truly eye-opening. Savers with significant balances are seeing their money eroded by inflation, when it could be working much harder elsewhere.”

Sprawling said that while a “small proportion” of accounts hold the majority of these low-earning balances, “millions of people are missing out on the benefits of switching to a more rewarding savings account without suffering meaningful downsides”.

Poor interest rates rife among rich Brits

The plague of low interest rate accounts is especially impacting those with a significant amount in savings.

Spring found £24.5 billion (77%) of the total amount languishing in low interest accounts is in accounts holding at least £10,000.

Having a large savings balance in an account with a low interest rate is especially stark, as it means you are missing out on more substantial returns.

For example, the difference between a balance of £100 earning 1% and 5% is just £4 in lost interest. Meanwhile, a gap of £400 exists when this account balance grows to £10,000.

What are the best savings accounts on the market?

Zopa’s Smart Saver is the best easy-access saver on the market, paying 4.75% interest on your savings for the first 12 months. After this, the interest rate falls to 3.31%.

The second-best easy-access saver is Chase’s Saver with boosted rate, paying 4.5% for the first 12 months, before falling to 2.56%.

If you are happy to lock your cash away in return for a guaranteed interest rate, the best fixed term savings account on the market is from AL Rayan Bank, which pays 4.56% interest.