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\n\t\tAre you losing money (Picture: Getty Images)<\/p>\n
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\n\t\tAre you losing money (Picture: Getty Images)<\/p>\n
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Do you get paid into your current account and then just let the money<\/a> sit there? You\u2019re losing value on your cash if so.<\/p>\n New data shows that in the UK, 6.4 million current accounts contain \u00a310,000 or over \u2013 which means all that money is earning no interest. But even if you have less than \u00a310,000 in savings, that doesn\u2019t mean you should stop reading.<\/p>\n Experts say that if you have more than \u00a31,000 in your current account, you may as well be choosing to lose cash. Only 0.04% of current accounts beat inflation<\/a> by earning 4% or over \u2013 most do absolutely nothing, meaning the value of your money drops.<\/p>\n Derek Sprawling, head of money at Spring<\/a>, who is behind this data, tells Metro<\/a>: \u2018A current account should be seen as a tool for everyday spending, not a place to store large sums of money long-term.\u00a0<\/p>\n \u2018Think of your current account as your digital wallet \u2013 designed for convenience, not storage. You wouldn\u2019t carry \u00a32,500 in cash to the supermarket<\/a>, so why leave it idle in a current account? Treat it as a flow-through space for your money, not a destination.<\/p>\n Ideally, you want to keep between \u00a3500 and \u00a31,000 in your current account, which Derek describes as a sensible amount to cover regular bills and a buffer for unexpected expenses.<\/p>\n \u2018Anything beyond that could be working harder for you elsewhere. With interest rates on many current accounts sitting well below inflation, excess funds are losing value in real terms,\u2019 he says.<\/p>\n \t\t\t\tRemind me…what does inflation mean?\t\t\t<\/p>\n Inflation refers to a general rise in the level of prices. The opposite is deflation, a general fall in the price level.<\/p>\n If the cost of a \u00a31 bag of flour rises by 5p, then flour inflation is 5%. It applies to services too, like getting your hair cut.<\/p>\n You may not notice low levels of inflation from month to month, but in the long term, these price rises can have a big impact on how much you can buy with your money.<\/p>\n Rising inflation is one reason why some savers might wish to turn to investment, as the returns from putting money into the stock exchange are traditionally more likely to match rising prices than the returns from cash savings.<\/p>\n Find out more here.<\/a><\/p>\n To view this video please enable JavaScript, and consider upgrading to a web If this isn\u2019t clicking, Sprawling breaks it down. Inflation is currently at 3.8%, so \u00a310,000 held in a no-interest current account could lose around \u00a3380 in real value over a year.\u00a0<\/p>\n \u2018That\u2019s the hidden cost of inaction. If your money isn\u2019t earning at least the rate of inflation, it\u2019s effectively shrinking. Switching to accounts offering higher returns is key to preserving purchasing power,\u2019 he says.<\/p>\n \u2018I encourage savers to shop around and find the best rate that works for you but also take into account your needs. <\/p>\n \u2018If you want an account that enables you to access your funds within minutes, not days, do your research and check the Terms and Conditions of different accounts; not all \u201ceasy access\u201d is as easy as you might presume.\u2019<\/p>\n If you don\u2019t want your money to be locked into a savings<\/a> account with lots of strings attached as to how often you can withdraw, don\u2019t worry, because there are plenty of savings accounts that let you take out and put in as often as you like \u2013 you just have to do some comparing to find the best one for you.<\/p>\n As for your current account, Derek recommends doing a weekly review of the money in there. <\/p>\n \u2018Weekly budgeting works well for many people \u2013 it helps maintain control and prevents overspending,\u2019 he says. \u2018Topping up your current account in line with your spending habits ensures you\u2019re not leaving large sums exposed to inflation.\u00a0<\/p>\n \u2018The key is to be intentional: know what you need, keep that amount accessible, and move the rest to an account that rewards you for saving.\u2019<\/p>\n That way, your current account is essentially just a digital wallet \u2013 not a money pit losing value by the month.<\/p>\n Arrow Arrow Arrow
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