Millions of Brits risk losing over £500 from bank account
According to reports, millions of Brits are flushing away over £500 a year by leaving their cash rotting in low-interest 'zombie' bank accounts.
New research reveals more than half of UK savers are hoarding their hard-earned cash in zero-interest current accounts.
The research, by Opinium for Hargreaves Lansdown, found 56 per cent of savers are putting money in accounts that give them absolutely nothing back – a 20 per cent rise from last year.
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67 per cent of 18–34-year-olds admit to stashing savings in current accounts, rather than moving them to proper savings pots.
81 per cent of higher-rate taxpayers and 83 per cent of investors are also making the same mistake.
£297bn is currently held in accounts earning no interest – up by about a fifth in a year. £3,365 is the average amount held in current accounts, rising to £10,180 for the highest earners. £114 is what the average saver loses in spending power after one year at 3.5% inflation, or £344 for higher earners.
Researchers calculated that if you had the average of £3,365 savings in a current account, and inflation was running at 3.5%, after a year, your money would have the same buying power as £3,251 today – so it would have lost £114 of spending power.
But if you moved the cash to a competitive easy-access account, you could earn a return that's higher than inflation.
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Sarah Coles, personal finance boss at Hargreaves Lansdown, said: 'You don't have to transfer cash from another account in order to spend it, you just spend as normal – and find yourself eating away at your savings."
Ms Coles said: 'With inflation around 3.5%, a household holding £3,365 in a zero-interest account would lose £114 in spending power in just one year.' Those sitting on £10,180 would lose £344 annually – and over five years, £3,365 could shrink by £532.
She added: 'These sites let you track everything in one place – and snap up the best rates without drowning in paperwork."
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She said: "Make a list and put a time in your diary and you'll finally get round to all those things you've been putting off. "For example, automating payments on your finance days to help you avoid missing debt repayments can save you £100 a year or more. "While shopping around for car insurance can save £75, shopping for a better energy deal could save £200 a year. "Don't try to do everything at once or you'll get exhausted and give up. Start with something simple and build from there." 4. Have cheat days - save £200 Restricting your diet to just salad means there's a higher chance of binge eating. The same goes for your finances. There's a greater chance you'll have a shopping blow out if you've put yourself on a super strict budget. The trick is to have "cheat days", where you treat yourself to something nice but affordable so it won't ruin your budget. That could be anything from getting a cheeky Maccies once a fortnight for the family, or treating yourself to a new piece of clothing once a month, or two months. Sarah said drip-feeding yourself treats instead of overspending could save you £200 a year. 5. Slim down your tax bill - save up to £392 Nobody likes paying tax - but there are handy tax reliefs that can help keep more money in your pocket. Married couples can save up to £252 a year in tax thanks to the marriage tax allowance. This tax break allows those who earns less than the £12,570 personal allowance (the amount you can earn before you start paying income tax) to give up to £1,260 of that allowance to their partner. You can backdate claims by up to four tax years, which means you can get a maximum of £1,260. Work from home? You could get up a tax break worth up to £140 a year. You can claim working from home tax relief if your job requires you to live away from your office, or your employer doesn't have an office. You can't claim the relief if you choose to work from home. The relief aims to help you pay for essential bills like business phone calls and energy. You can claim tax relief on £6 a week. So if you are a basic rate tax payer, that means you pay a 20% tax rate. So 20% of £6 is £1.20 a week back in your pocket - which over the year racks up to £62.40 a year. Higher rate tax payers would be eligible for £2.40 a week (£124.60 a year), as their tax rate is 40%. While additional rate taxpayers would get £2.70 a week (£140.40 a year) as their tax rate is 45%.
