According to new research from Paragon Bank, using CACI data, the average easy access balance has continued to surge during lockdown and exceeded a record £11,000.
CACI’s database, which analyses savings data from more than 30 providers, shows that easy access average balances continue to climb, growing from £10,132 last January to £11,0921. At 9.5%, this growth is a third more than the easy access balance increase between January 2019 and January 2020, which was around 6.6%.
The boost to savings during the pandemic has been well documented, with Bank of England estimating that £162 billion has been saved since the first lockdown last March.
Much of this balance growth has been made in easy-access and current accounts. Easy access balances now account for 58.7% of the savings market (excluding current accounts), up from 55.6% last January, while fixed rate non-ISA balances have reduced – they now account for 8.8% of the market, down from 10.5% year-on-year.
Cash ISA markets have delivered some growth. Cash ISAs are worth £292 billion, an increase of only 0.6% in the last year, compared to an increase of more than 4% the year before.
On the other hand, the non-interest bearing market has climbed an enormous 29% year-on-year, by far the largest segment growth across any category.
Derek Sprawling, Savings Director at Paragon Bank, said:
“We know that reduced expenditure during lockdown has created a nation of ‘accidental’ savers, with most people choosing to keep extra money in easy access or current accounts.
“There are numerous reasons why people have chosen to save in this way. While many will be making contingencies for a ‘rainy day’ by building an emergency fund, some might just be unsure what to do with their savings. Others might want to wait until the restrictions start to lift before they make definitive plans for their money, or just value the convenience of staying with their current provider rather than being proactive in targeting higher returns
“Regardless of long-term saving goals, it’s important for people to move savings out of current accounts, where they may be earning zero interest, in order to receive at least some return. ISAs should also not be overlooked as they provide tax free income now and in the future.”
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