Anyone with a bank account has been advised to move anything over £1,000 (Image: Getty)
A finance expert has issued a warning to anyone who has more than £1,000 in their bank accounts. The vast majority of Brits have a main current account that they get paid into and from which they spend.
These bank accounts are a modern necessity, and anyone with any sort of income needs one. Plus, they are essential when it comes to paying bills such as energy, water and council tax, as well as paying off loans. While these accounts are needed for cash for monthly spending, there are other, better ways to store your money over time. A finance expert has revealed people who have more than £1,000 in their current accounts are essentially “losing cash” as it is gaining no interest.
READ MORE: Barclays £400 cash bonus payment criteria and April 30 deadline
READ MORE: Savers in the UK must remember important £20,000 rule
The warning comes to anyone with at least £1,000 in their account (Image: Getty)
It comes as data shows millions of Brits have £10,000 or more in their current accounts, earning no interest like they would with a savings account, such as an ISA. An expert revealed the ideal amount to have in your account at any given time is between £150 and £1,000.
Derek Sprawling, head of money at Spring, told The Metro: “A current account should be seen as a tool for everyday spending, not a place to store large sums of money long-term.
“Think of your current account as your digital wallet – designed for convenience, not storage. You wouldn’t carry £2,500 in cash to the supermarket, so why leave it idle in a current account? Treat it as a flow-through space for your money, not a destination.”
He explains that up to £1,000 in your account is usually all that is needed to pay monthly bills. “Anything 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,” he said.
For example, if you have £10,000 in your current account for the year, you could lose a staggering £380 by not putting it into a savings account, as the inflation rate is currently at 3.8%.
“That’s the hidden cost of inaction,” Sprawling explained. “If your money isn’t earning at least the rate of inflation, it’s effectively shrinking. Switching to accounts offering higher returns is key to preserving purchasing power.
“I encourage savers to shop around and find the best rate that works for you but also take into account your needs.
“If 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 “easy access” is as easy as you might presume.”
There are different types of savings accounts based on how often you like access to your money, and how much you want to put away every month. One of the most popular ways to save is with a Cash ISA, which allows savers to earn tax-free interest on up to £20,000 per year.