£235 billion 'cash mountain' sitting in bank accounts with low interest rates

20 May 2024

£235 billion of cash is sitting in low interest bank accounts with rates of under 1%, according to the Bank of England.

The data shows that over a quarter of a trillion pounds is held in low interest bank accounts, although the figure is down £19 billion on the excessively high figures accumulated during the pandemic.

From 2008 to 2022 the level of cash sitting in low interest accounts increased by over £200 billion.

When the interest rates were last 5.25% there was just £33 billion in accounts that were not paying out interest, rising every year until 2017 when it dropped to almost £150 billion.

Laith Khalaf, Head of Investment Analysis at AJ Bell, said: 'A mountain of cash paying no interest to savers built up in the wake of the financial crisis as a result of low interest rates and bank funding schemes introduced by the Bank of England.

'Given the dramatic rise in interest rates over the last few years, one might have expected this cash mountain to crumble, but remarkably £253 billion 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.'