According to analysis of CACI data by Paragon Bank, £54bn of adult cash ISA savings earn 2% or below. The majority (96%) of this money is sitting in access accounts.
Researchers at Paragon worked out that £52.4bn earning 2% or below was held in instant-access cash ISA accounts, while just £1.7bn was held in fixed rate ISA accounts earning 2% or lower.
By comparison, £250.6bn is held in non-ISA accounts earning 2% or below, with £234.7bn in access accounts.
CACI compiled the savings deposits of 40 leading providers of cash savings as at December 2024.
Based on 7.2 million instant-access adult cash ISA accounts earning 2% or below, the average balance in each account stood at £7,252. However, CACI’s data shows there are 1.6 million accounts containing a balance of more than £10,000, and 18,305 accounts containing between £85,000 and £100,000.
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An ISA saver with the average balance of £7,252 earning 1.5% AER would earn £108.78 in interest over a year. If that balance was transferred into an access account earning 4%, the interest generated would more than double to £290.08.
Derek Sprawling, Paragon Bank’s managing director of savings, said: “Over 96% of cash ISA balances earning 2% or below is held in instant-access variants, meaning that people can easily switch that money into a better paying account.
“On average, these accounts contain over £7,000 and that money could be generating much better returns by switching. Many savers overestimate the effort involved in switching a cash ISA. I’d encourage anyone receiving under 2% to consider their options.
“On the plus side, it’s positive that savers are protecting their money from tax by keeping it within an ISA wrapper, but on the downside, there’s billions of pounds that could be working harder by being moved to higher-paying accounts.”
