Saving in current accounts

03 July 2023

Brits saving in current accounts are missing out on up to £619 a year in interest

  • Research conducted by Atom bank finds that savers miss out on up to £619 each in interest by having savings in current accounts, rather than dedicated savings accounts
  • Over 12 million (30% of Brits) hold the majority of their savings in a current account, and many banks’ business models depend on this
  • Young people are more likely to have their savings in current accounts, with over two-fifths of those aged 18-34 holding most of their savings in current accounts

Atom bank has today released new research1 as part of its “Get paid, not played” campaign that encourages big banks to offer fairer rates on savings products, and educates people on the ease of setting up savings accounts to ensure their money works harder for them.

The research reveals that 12.6 million (nearly a third) of UK adults hold most of their savings in a current account with their main provider. As a result, they are missing out on up to £619 each in interest a year, totalling nearly £8bn, by holding their money in a current account rather than a market-leading easy access saver2. The findings reinforce the need for people to be aware of the benefits of making their money work harder for them in higher interest savings accounts, rather than leaving their savings languishing in current accounts which pay little interest.

The research suggests a need for better financial education on the monetary advantages of savings accounts, particularly amongst younger age groups. Four in ten (42%) aged 18-34 hold most of their savings in current accounts, compared to nearly a third (31%) of those aged 35-54 and just a fifth (21%) of those aged 55 and over.

Incentives, not rates, drive current account switching

There has been a recent marked increase in the number of people proactively switching their current accounts, with the Current Account Switch Service3 finding that 341,000 accounts changed providers in the first quarter of the year, up 70% from the same period last year. However, customers were incentivised by cashback schemes and switching bonuses, rather than better rates.

Given the willingness of Brits to switch their current accounts for such incentives, there is no reason why people shouldn’t be similarly proactive in putting their money in savings accounts and switching to the best rates, which could give them significantly more interest per year. Atom’s analysis shows that the average high street bank easy access account pays just 0.97% today, with the current market leader paying 4.21%4.

The Treasury and the FCA have both openly questioned high street banks on their “measly” easy access rates5. Harriett Baldwin MP, Chair of the Treasury Committee, pointed to recent results announcements, which show that the UK’s biggest banks are continuing to squeeze record profits from their loyal savers.

Separate analysis from Atom backs this up, showing that the big five banks posted combined profits of over £5 billion in the first quarter of this year, a 43% increase on last year. The data shows that the majority of this jump in profits was a result of the banks increasing their margins at the expense of savers. The same analysis also suggests that many savers have already started to vote with their feet, with £22bn of customer deposits leaving the big banks year on year6.

The notion of free banking is a myth

Despite what is widely believed, providing current accounts and transactional banking services to customers, seemingly for free, does come at a cost. While current account customers may feel they are getting a free service, there is a hidden cost which comes in the absence of a decent interest rate on their savings.

It is not in these banks’ interests for their current account customers to move their money to dedicated savings accounts, which provide a better level of interest. Their business models rely on customer inertia and keeping those customers’ savings in current accounts paying well below 1% interest.

Mark Mullen, CEO at Atom Bank, said:

“The notion of free banking is a myth. The customer pays for everything. Be that flashy TV adverts, high street branches or whizzy current accounts, the cost of everything is passed on. This is often in the form of a terrible rate on current accounts and savings products, where UK savers are missing out on billions in interest.

“Moving money to a decent savings provider can mean hundreds of extra pounds a year in your pocket. We’ve seen a rise in the use of the Current Account Switch Service as customers take advantage of one-off payments to move, so there’s no reason why savers shouldn’t be proactively making the switch too.

“Increasing awareness and financial education, particularly among younger age groups, is needed in order to change these behaviours. Savers are covered by the FSCS for sums up to £85,000 and should be taking advantage of some of the best savings rates in decades. Easy access saver accounts can be opened in minutes, and providers should allow unlimited withdrawals, so it really is that simple.”


Notes to editors

1 Research was conducted between 21st-25th April 2023 with a nationally representative sample of 2,000 UK adults

2 Analysis conducted by Atom bank on the difference in interest between current accounts (0.65% BoE bankstats data) and the best buy unrestricted savings account rate (Chip 4.13% gross) on an average balance of £17,365 in savings (correct as of 26/06)

Average savings balance Annual Interest on best buy rate Annual interest at Current account rate Difference 12.6m total missed out
£17,365 £733 £114 £619 £7,804,818,000


4 Atom analysis of average easy access rate at Barclays, HSBC, NatWest, Lloyds, Santander, TSB, Virgin Money and Nationwide (0.97% AER) v best buy unrestricted savings account rate (Chip 4.21% AER) (correct as of 26 June)


6 Analysis conducted by Atom bank following Q1 results of high street banks

£Bn Lloyds NatWest Barclays HSBC Santander Total
Profit before tax 2.3 0.8 0.8 0.6 0.5 5.0
Interest Income 3.5 1.5 1.6 1.1 1.2 8.9
Estimated Banking NIM 3.22% 2.99% 3.18% 2.92% 2.20% 2.91%
Change in Banking NIM 0.54% 0.56% 0.56% 0.57% 0.23% 0.48%
Change in Loans 0.5 17 0.9 -2.9 1.8 25.5
Change in Deposits -8.0 -5.7 -6.0 -15.0 0.7 -22.1

For more details journalists can contact:

For Lansons

Ed Shelley, 07825 427522

Sorcha Hornett, 07811 064 468

For Atom

Robbie Steel, 07538 775 701

About Atom bank

Atom bank is the UK’s first app-based bank, on a mission to make the experience of borrowing and saving faster, simpler and better value than anyone else.

The bank launched operations in April 2016, and offers award-winning mortgages and savings through its app, alongside secured business lending for small and medium-sized enterprises.

Based in the North East of England with a team of over 470 people, Atom is here to ​​change banking for the good, for the better, and for everyone. This means focusing on customers’ needs, delivering better value than the incumbents, providing an exceptional app-based experience and offering award-winning customer support via phone, chat, email and social channels.

Based in Durham, Atom is an engaged and active member of the North East Community. In 2022 Atom signed a five-year Memorandum of Understanding with Durham University to progress key research and diversity initiatives. The region has one of the highest levels of youth unemployment in the UK and Atom is passionate about addressing the critical digital skills gap and helping develop young people and other groups that are under-represented within the industry.

As of November 2021, all employees enjoy a four-day working week, after Atom became the largest company - and only bank - in Britain to introduce the policy, with no reduction in salary.

The Atom executive team are highly experienced, having built and run some of the most well-respected banks in the UK. CEO Mark Mullen has 30 years’ experience in the sector and was previously CEO at the multi- award-winning telephone and internet bank first direct. The team is supported by a strong non-exec board, chaired by Bridget Rosewell CBE.