People who have £1,000 in bank account urged to 'move' money immediately

Savers have been warned over £253 billion sitting in accounts paying no interest. The good news is, you can still find savings accounts that pay above the rate of inflation, which currently sits at 3.2 per cent, amid the Cost of Living crisis.

Laith Khalaf, head of investment analysis at AJ Bell, said: “Given the dramatic rise in interest rates over the last few years, one might have expected this cash mountain to crumble, but remarkably £253billion still sits in accounts paying zero interest to households.

"This is money which is simply wasting away once the effect of inflation is taken into account. It would hold as much value stuffed into a mattress, if you could find one that would hold a quarter of a trillion quid.

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“The last time interest rates were at 5.25%, in April 2008, there was £33billion held by households in accounts paying no interest. Even accounting for the increased stock of household savings over that period, that still looks like a phenomenal explosion in this type of account.

"To give some context, between 2008 and 2024 the amount held in instant access accounts paying some interest has increased from £510billion to £911billion, so nowhere near the same level of growth.”

Paragon Bank has a 5.05 per cent rate (two withdrawals per year, rate drops to 1.5% from third onwards) with a minimum deposit of £1,000 and maximum of £500k, while Oxbury has 5.02 per cent and Monument Bank has 5.01 per cent, with minimum deposits of £20,000 or £25,000 each. Close Brothers has a five per cent rate, while Kent Reliance has 4.96 per cent.

The other top rates include Cynergy, which Money Saving Expert says has a 4.93 pr cent rate but it drops to 3.75 per cent after 12 months. From established names, the top rates are from Yorkshire Building Society, Tesco Bank and Post Office, at 4.80 per cent, 4.76 per cent and 4.75 per cent respectively. The Tesco rate drops to 1.25 per cent after 12 months and the Post Office rate drops to 1.55 per cent after a year, too.