£253 bn Sits Pretty in Zero‑Interest Accounts—Your Wallet Don’t Know It!
Just when you thought your spare cash was making the most of the bank’s “flexible savings” gimmicks, smart‑money app Plum pulls back the curtain and reveals a staggering £253 bn of hard‑earned savings lying flat on the floor of non‑interest‑bearing accounts across the UK.
What’s Happening With the Dry‑Cash?
- Over the last year, the nestle‑in‑nothing amount dropped from £268 bn to £253 bn – still a massive free‑fall of potential interest.
- About 14 % of every pro‑cash‑savvy household’s money is stuck in “easy access” or “current” accounts that earn literally 0 % interest.
- When inflation bursts the bubble, that cash loses its buying power. Picture a £1,000 bill turning into £825.89 after five years, assuming a 3.9 % inflation rate.
Bank‑of‑England Numbers Light the Fire
Plum’s take comes after the latest Bank of England data that shows household savings are growing – the digital money reserves in current accounts, easy access, fixed‑rate accounts and cash ISAs climbed to £1.75 trillion by the end of the last month.
Lost in the Real‑Term World
Despite this growth, the country’s collective savings might have slipped a cold £33 bn in real terms over the year, based on current inflation and an average easy‑access rate. For the everyday saver, a £1,000 stash in a but‑not‑compound account could shrink to just £982 in real value after earning about 1.99 % interest.
Good News? Yep, the Juice Is Back
Some “top‑rate” easy‑access accounts now pay a higher interest rate than inflation, meaning people can finally pocket a real‑term gain. Take the base rate and pocket the full 1.99 % interest on a £1,000 balance over a year – you’d walk away with roughly £1,014 in real terms, assuming inflation holds steady at 3.9 % for the next 12 months.
Plum’s Take‑away: Time to Move Your Money
Victor Trokoudes, Plum’s CEO and founder, says:
“While fewer people are keeping money in zero‑interest accounts, a huge chunk of hard‑earned cash is still not earning anything,” he admits. “That’s a major wastage—people miss out on growing their stash and keeping it fresh even when rates beat inflation.”
He adds:
“The FCA has pushed high‑street banks to offer rates that mirror the base‑rate rise. Still, an 1.99 % average on easy‑access deposits feels unfair compared to a 5.25 % base rate. Borrowers pay more while savers see minimal upside—our biggest banks aren’t aligned with their customers’ interests.”
But it’s not all doom and gloom. “Some financial outfits are now offering rates closer to the base rate, making it far more enticing to put your savings to work.” As economists anticipate a slowdown in rates this year, the message is clear: Take advantage of real gains now before the water runs dry.
So why aren’t people putting their money to work?
Wake Up Your Money: A Reality Check
We all know that money — especially the kind that sits in a savings account — should have a job. Yet almost 17 % of people are still guessing whether their pennies are actually earning interest. That’s like leaving your phone on the charger and not knowing if it’s really giving you a full battery.
What’s Keeping Your Cash Stuck in Bed?
- Low interest rates (27 %): Most folks say financial firms just won’t give them the boost they need.
- Half the population (49 %) wants rates higher than 5 %—the same ballpark as the Bank of England’s base rate of 5.25 %.
- Top‑tier high‑street banks still offer around 2.5 % on easy‑access accounts.
Inflation: The Silent Band‑it‑Sleep
While your savings feel cozy, 44 % of people don’t realize how inflation is quietly shrinking their buying power. In plain terms, you’d need £1,039 today to purchase the same goods your £1,000 bought a year ago. That means you’re out £39 every month if you’re not earning any interest.
Plum’s “Wake Up Your Money” Campaign
Victor from Plum says, “Your money shouldn’t be lounging on the sofa; it should be pulling double‑duty, just like you do.” But without a proper wake‑up call, it just keeps snoozing. That’s why we’re launching a campaign to bring your savings out of hibernation.
- Even if we’re all in love with saving for the future, life’s day‑to‑day hustle can turn that dream into a pipe dream.
- Apps like Plum automate savings, turning it into a painless part‑of‑your‑routine trick so you can focus on living today and not get freaked out by the ticking clock of financial planning.
Don’t let your money stay on the couch—give it a push and make it work for you.
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