Individuals keeping funds in their current bank accounts have received a stark warning. Fresh research from Yorkshire Building Society revealed that over 12 million current accounts across the UK are believed to be offering 1% or less in interest on balances exceeding £5,001.

This suggests people are forgoing substantial interest earnings – with their funds potentially performing far better elsewhere.

Discussing Christmas expenditure, Tina Hughes, director of savings at Yorkshire Building Society, commented: “Christmas is usually a time of celebration, but this year many households are cutting back as budgets tighten.

“The number of people planning to spend over £1,000 has fallen dramatically. With household budgets under pressure and financial stress rising, it’s clear many are feeling the pinch.”

“Yet millions are still missing out on easy wins – like earning interest on their savings. For many, that extra income could have easily covered the cost of Christmas, but for those without savings to fall back on, starting a regular saver now could mean a stress-free festive season next year – without relying on credit.”

The percentage of individuals who planned to spend generously this Christmas dropped significantly compared to the previous year, according to the study.

Households anticipated spending £596 on average this year, declining from £774 in 2024, Yorkshire Building Society discovered. The number of individuals planning to spend over £1,000 has dramatically dropped to 15%, a significant decrease from last year’s 51%.

Over half (55%) of those surveyed admitted to feeling financial stress, with nearly a quarter (24%) intending to utilise credit cards to manage expenses.

Among the borrowers, there is a wide range of expectations regarding debt clearance. Approximately half (51%) anticipate settling their festive debts within three months, while a quarter (24%) foresee it taking up to a year.

Opinium Research conducted a survey in November involving 2,000 UK residents. The results were compared with a previous Opinium Research survey carried out in September 2024 involving the same number of participants.

Yorkshire Building Society also incorporated an analysis of Caci’s current account database for research into account interest.

Earlier this year, data revealed a staggering £526 billion lying dormant in current accounts, earning no interest. This implies that around 29 million people are missing out on £20 billion annually in interest by leaving money idle in current accounts instead of transferring it to high-interest savings accounts, according to research conducted by Spring Savings, a new savings app launched by Paragon Bank.

One in three individuals have £5,000 sitting in their current account, whilst the typical current account balance stands at £2,067. Derek Sprawling, of Paragon Bank, explains: “High street banks are offering little to no interest on savings while making it unnecessarily difficult to access better alternatives, resulting in the rise of ‘current account coasters’.”

The problem extends beyond merely inadequate savings rates – a more basic obstacle seems to be indifference amongst savers. Numerous people aren’t proactively handling their savings or hunting for the finest accounts to guarantee their money expands as substantially as feasible.

Based on Paragon’s findings, one in ten individuals confess they abandon money in their current accounts purely because they haven’t yet managed to transfer it to a higher-yielding savings account. A further 11 per cent state that they have no particular justification for not moving their funds to a high-interest account.

Remarkably, slightly over 20 per cent of people claim they maintain money in their current accounts as an emergency fund, indicating that for some, the ease of readily available funds trumps the prospect of superior interest returns. For those savers who are proactive in seeking higher returns, the difference can be substantial.

For instance, if £5,000 were deposited into the top easy-access savings account offering 4.76 per cent interest, it could yield approximately £243 in interest. Conversely, the typical current account balance of £2,067 would only generate around £175.56 if placed in the same high-interest account.

Evidently, savers are losing out on considerable growth by not capitalising on the highest available interest rates.