One in three keep most of their money in current accounts, despite much better savings rates on offer

Millions of savers are missing out on the opportunity to earn interest on their savings by keeping them in current accounts, new data shows.

Three in ten savers keep the majority of their savings in their current account, according to a new study by the Building Societies Association.

Keeping savings in a bank account is bad news for most savers as they will earn very little or no interest on their savings.

In July, there was £248.9bn stashed away in non-interest-paying accounts, Bank of England data shows.

Even savers who keep their savings in the most basic, easily accessible savings accounts at their banks will only earn a paltry return of less than 2 percent.

With savings of £10,000, figures from rate monitor Moneyfacts Compare show that flexible easy access accounts from five of the UK’s biggest banks pay an average interest rate of just 1.64 per cent – 1.44 percentage points behind the market average for an easy access account.

The average easy access account pays a rate of 3.08 per cent according to Moneyfacts Compare.

Lloyds Bank’s Easy Saver card is the worst performer, adding a mere 1.3 per cent to the money savers keep on its easy access offering, or £1.30 for every £100 saved.

The interest rate on HSBC’s Flexible Savings Account is 1.98%, while Santander’s Easy-Access Saver is 1.7%. Barclays’ Everyday Saver is 1.65% and NatWest’s Flexible Saver is 1.59%.

Keeping £10,000 in one of these traditional bank savings accounts would generate around £165 in interest over a year, according to This is Money’s savings calculator.

By comparison, a saver holding £10,000 in an easy-access account paying 4.76 per cent would earn around £487 in interest in a year.

That is a gap of interest of £322 and serves as a stark reminder to savers that loyalty doesn’t always pay off when it comes to where they keep their savings.

According to the BSA, the younger a saver is, the more likely they are to keep their savings in their current account.

Two out of five savers between 18 and 34 years old keep most of their savings in their bank account.

But this figure drops to 28 percent among savers aged 35 to 54 and 16 percent among savers aged 55 or older.

One in six people, or nine million, do not have a single savings account, according to savings platform Flagstone.

At a time when savings rates are becoming less attractive than they used to be due to falling interest rates, finding the best savings accounts to make your money go further is more important than ever.

> Best Savings Rates: Check out This is Money’s savings tables with the best buying options

Rachel Springall, finance expert at Moneyfacts Compare, said: ‘The big banks’ most flexible accounts pay an average rate of 1.64 per cent gross between them, which is significantly lower than the market average rate of 3.08 per cent gross, based on a £10,000 deposit.

“This clearly demonstrates why savers need to look beyond the best-known brands, as their loyalty is not rewarded. It is vital that consumers regularly review and change their easy-access account to ensure they are getting a decent return.”