Our commitment to saving, both during the lockdown years and even now, means we now have nearly an incredible £1 trillion of savings in easy access accounts, Ms Coles said
Britons have been warned about the implications for their money and financial stability.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said: The scale of cash languishing in easy access savings and earning next to nothing has hit monumental proportions.
Our commitment to saving, both during the lockdown years and even now, means we now have nearly an incredible £1 trillion ($1.21 trillion) of savings (£994 billion) in easy access accounts, she said. As a result, we’re losing a small fortune in lost interest.
In May we saved another £5.4 billion ($6.54 billion), plus another £300 million ($363.27 million) with NS&I, Ms Coles said.
This is just above the average combined total of £5.6 billion ($6.78 billion) in the year before the pandemic. It also takes the total in easy access accounts close to £1 trillion ($1.21 trillion). So, it’s particularly dreadful news that the average easy access rate crept up just three basis points to 0.18 percent, she said.
However, many people are suffering with interest rates at even greater proportions.
A number of high street providers are offering rates the expert described as ‘insulting’, with one bank still paying only 0.01 percent.
The situation is improving somewhat, as the Bank of England base rate creeps up.
While it is taking some providers longer to pass on the benefits to its savers, others have been quick to introduce better rates.
Ms Coles cited Al Rayan Bank which currently offers up to 1.45 percent as long as savers can keep a balance of £2,500 ($3,027.24) in the account.
Alternatively, there are no strings attached with an offer from Zora of 1.4 percent.
Those who are prepared to switch current accounts could benefit from an interest rate of 1.56 percent from Virgin Money.
Ms Coles added: For the money you really need to keep in easy access savings, including your emergency fund of three to six months’ worth of essential expenses.
If your cash is languishing in an account with a high street bank while you hope for a rate rise, now is the time to stop waiting and start switching, she said.
For the long term, Britons may be able to put other funds into a fixed rate account, which are also continuing to rise in offers.
However, these often come with conditions in terms of access, which should be carefully considered.
Ms Coles said: The Bank of England figures show that the average new fixed rate rose 16 basis points from 1.09 percent to 1.25 percent, and you can get increasingly attractive rates by fixing.
She said: The best rates over one year continue to creep up. Right now, by fixing for a year, you can make up to 2.7 percent – compared to a best rate of 2.4 percent a month ago.