Yorkshire Building Society issues savings warning for Britons with over £5,001 in the bank

Yorkshire Building Society said the findings highlight how significant amounts of money are being left in accounts that offer minimal returns.

The analysis was based on data from Caci’s current account database.

The building society said many account holders could increase their returns by moving surplus cash into savings products that pay higher rates of interest.

Separate research has suggested the scale of the issue is widespread.

Earlier this year, research by savings app Spring Savings, launched by Paragon Bank, found that £526billion is currently held in UK current accounts earning no interest.

The figures indicate that around 29 million people are collectively missing out on an estimated £20billion in interest each year.

Research also found that one in three people have £5,000 or more sitting in their current account.

The average balance held in a current account was £2,067.

Derek Sprawling, savings expert at Paragon Bank, said some banks are failing to encourage savers to seek better returns.

"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."

Yorkshire Building Society also examined how financial pressures are affecting household spending.

The research found households expected to spend an average of £596 during the Christmas period.

This represents a fall from an average of £774 the previous year.

The building society said fewer people were planning higher levels of festive spending.

Only 15 per cent of respondents said they expected to spend more than £1,000 on Christmas celebrations.

This compares with 51 per cent who planned to spend that amount the year before.

Research found more than half of those surveyed reported feeling financially stressed.

Around 55 per cent said they were under financial pressure.

Nearly a quarter of respondents said they planned to use credit cards to help cover Christmas costs.

Among those planning to borrow, around half said they expected to repay their festive spending within three months.

Tina Hughes, director of savings at Yorkshire Building Society, said households were adjusting spending as budgets tightened.

"Christmas is usually a time of celebration, but this year many households are cutting back as budgets tighten."

She said the number of people planning to spend more than £1,000 had fallen sharply.

"With household budgets under pressure and financial stress rising, many people are rethinking their spending."

Ms Hughes also highlighted the impact of leaving large balances in low interest accounts.

Millions of people could be earning additional income by moving excess cash into higher paying savings accounts.

Yorkshire Building Society said even modest changes could make a difference for some households.

According to the building society, someone with £5,000 in an easy access savings account paying 4.76 per cent could earn around £243 in interest over a year.

The building society said this level of interest would not be available in most current accounts.

Current accounts are typically designed for day to day spending rather than long term savings.

The research suggests many people may be unaware of how much interest they are missing out on by leaving larger balances untouched.

Financial providers said savers should regularly review where their money is held and consider whether alternative accounts better suit their needs.

The findings come as banks and building societies continue to compete for deposits by offering higher savings rates.

Yorkshire Building Society said it hopes the research encourages more people to review their finances and make informed decisions about where they keep their money.