Over £54 billion of adult cash ISA savings are earning 2.0% interest or below, with the majority held in instant access accounts, according to Paragon Bank research.
Paragon’s analysis of CACI data found that £52.4 billion earning 2.0% or below was held in instant access accounts, which can be easily switched to higher-paying accounts. Just £1.7 billion was held in fixed-rate ISA accounts earning 2.0% or lower.
By comparison, £250.6 billion is held in non-ISA accounts earning 2.0% or below, with £234.7 billion in access accounts.
CACI compiles the savings deposits of 40 leading providers of cash savings (stock data as at December 2024).
Based on 7.2 million instant access adult cash ISA accounts earning 2.0% or below, the average balance in each account stands at £7,252. However, CACI’s data shows there are 1.6 million accounts containing a balance of more than £10,000, and 18,305 accounts containing between more than £85,000 and up to £100,000.
An ISA saver with a balance of £7,252 earning 1.5% would earn £108.78 in interest over a year. If that balance was transferred into an access account earning 4.0%, the interest generated would more than double to £290.08.
Derek Sprawling, Paragon Bank Managing Director of Savings, said: “Over 96% of cash ISA balances earning 2.0% or below is held in instant access variants, meaning that people can easily switch that money into a better paying account. On average, these accounts contain over £7,000 and that money could be generating much better returns by switching. Many savers overestimate the effort involved in switching a cash ISA. I’d encourage anyone receiving under 2% to consider their options.”
Derek Sprawling added: “On the plus side, it’s positive that savers are protecting their money from tax by keeping it within an ISA wrapper, but on the downside, there’s billions of pounds that could be working harder by being moved to higher paying accounts.”
