The typical UK saver is £1,000 better off than they were prior to the pandemic, but they are more likely to stash their cash in a low-interest easy-access account.
The average savings balance has risen from £11,141 in March 2020 to £12,145, according to CACI data analysed by Paragon Bank.
The savings data, captured from more than 30 banks and building societies, shows total savings having grown by 8.3 per cent since the pandemic started, climbing from £903billion to £978billion.

Rainy Day Fund: Money in easy access savings accounts makes up an incredible 60.6% – an increase by 17.4 percent since March 2020
However, Britons seem to be putting their lockdown savings in easy access accounts and not higher-paying fixed-rate deals.
The average easy access balance has grown by £1,450 since the pandemic began from £10,246 to £11,696.
Money in these accounts is collectively worth £593 billion, meaning that more than 60 per cent of Britain’s savings is stashed away in them.
It is believed that the pandemic caused a lot of uncertainty.
They are easy-access accounts that savers can access whenever they want, without any penalty.
However, they pay a lower interest rate. The current best-buy easy-access rate is 0.65 percent. However, if a saver puts their savings away in a fixed rate account for only one year, they could earn more than twice that at 1.45 percent.
James Blower, founder of consultancy the Savings Guru said: ‘We are seeing more money in easy access accounts – largely driven by Covid.
‘First by people with extra savings because lockdowns-savings on travel costs, holidays not being able go out etc.
“These people aren’t sure what they should do with their spare cash so they keep it easy until they find the right thing.

“Secondly, this trend was caused by uncertainty created by Covid. This means people who are able are keeping more of a buffer in the future in the event of further disruptions.
Another savings product that Britons appear to have flocked to during the pandemic is regular saver accounts, with total balances rising by almost 38 per cent from £11.8billion to £16.3billion since Covid restrictions began.
Regular saver accounts allow savers to save a fixed monthly amount, but typically with a maximum or minimum deposit limit.
For example, the market leading deal offered by Cambridge Building Society pays 5 per cent interest on its extra reward regular saver account, but limits monthly deposits to £250 with a maximum balance of £3,000.
Customers will also need another product to be eligible for the building society.
Instant-access cash Isas have also remained popular since the pandemic began, with the amount saved in these accounts rising from £176billion to £187billion.
While easy access deals have boomed in recent years, many savers have given the fixed rate savings market a bit of a miss.
Fixed-rate deals have seen an exodus of cash, with total savings in these accounts having fallen by 21 per cent from almost £98billion to almost £73billion since the pandemic began.
Fixed-term Isa products offer higher interest for those who are willing to lock their cash away for a specific period.
The balance held in these fell from roughly £87billion in March 2020 to £78billion as of July this year.
Industry experts suggest that this trend could be reversed to fixed rate deals, despite the ease of access craze. This is because rates have improved and the worst lockdowns are over.
Blower stated that best-buy easy access rates fell to 0.40 percent in March and that one-year fixes were at 0.56 percent.
“This did not provide any incentive for savers or investors to hold on to their money.
“Now that the differential is 0.65 percent compared to 1.45 percent, there’s an incentive to lock away for savers.
“As such, I am seeing more money moving towards fixed rate savings. Savings Guru’s most-searched product in September was the one-year fixed rate. October was also a good month.
‘I think this trend of money moving back to fixed rates will continue ,and we will also see more of those lockdown savings balances being spent too – so I think easy-access balances have probably reached their high point.’
Easy access versus fixed rate deals
The Family Building Society is the best-paying easy-access deal available, paying 0.65 percent. However, savers have until November 5th to add money to this account.
Digital savings platform Chip is also offering an even better 0.70 per cent rate via Allica Bank, though customers will need to sign up to the service and pay the membership fee of £1.50 per month to access it.
This rate offered exclusively to Chip customers and through this link via This is Money, comes with Financial Services Compensation Scheme protection of up to £85,000 per person and allows savers to deposit a maximum of £30,000 into the account.
Type of account (min. investments) | 0% tax | 20% tax | 40% tax | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
ONE YEAR | ||||||||||||
Al Rayan Bank (£5,000+) (3) | 1.45 | 1.16 | 0.87 | |||||||||
Investec (£5,000) | 1.33 | 1.06 | 0.80 | |||||||||
Kent Reliance (£1000+) | 1.33 | 1.06 | 0.80 | |||||||||
TWO YEARS | ||||||||||||
Al Rayan Bank (£5,000+) (3) | 1.76 | 1.41 | 1.06 | |||||||||
Gatehouse Bank (£1,000+) (3) | 1.60 | 1.28 | 0.96 | |||||||||
THREE YEARS | ||||||||||||
Al Rayan Bank (£5,000+) (3) | 1.81 | 1.45 | 1.09 | |||||||||
Gatehouse Bank (£1,000+) (3) | 1.78 | 1.42 | 1.07 | |||||||||
FIVE YEARS | ||||||||||||
Gatehouse Bank (£1,000+) (3) | 2.05 | 1.64 | 1.23 | |||||||||
QIB (UK) (£1,000+) (3) | 2.00 | 1.60 | 1.20 |
Read our review of Chip’s exclusive deal to find out if this is right for you.
The savings platform, Raisin, is also offering a £50 welcome bonus to any new customer who puts £10,000 or more into a savings account.
Although its best easy-access account pays 0.45 per cent, the addition of the welcome bonus means that someone stashing away £10,000 could earn £95 in the first year – an effective return of 0.95 per cent, superior to the Chip rate.
Raisin does not charge account fees, unlike Chip. This means that savers’ returns won’t be diminished by a monthly fee.
However, the potential returns for savers who have their money locked away for at least one year are higher.
The leading one year fixed rate deal, via Al Rayan Bank, currently pays 1.45 per cent, although savers will need a minimum deposit of £5,000 to get started.
The bank, which is based in Birmingham, is Sharia-compliant. This means that it cannot guarantee interest to customers. Instead, it offers a expected profit rate for accounts.

These accounts have become more mainstream and appear often in This is Money’s independently compiled best buy tables.
Al Rayan Bank also offers the best fixed rate two- and three-year deals, at 1.76 percent and 1.81 percent, respectively.
Fixed-rate deals offer higher rates and are recommended for savers who are comfortable with locking away their money for a certain period of time.
This is especially true when you consider the expected increase in the Bank of England base rate early next years, which could drive rates up further.
Paragon Bank’s savings director, Derek Sprawling, stated that savers should not overlook fixed rates, especially since providers are expecting an increase in base rate.

The average UK savings balance now stands at £12,145.
‘The market is looking forward and rates in the best-buy table are no longer indicative of the current base interest rate.
“It’s important that savers take advantage of competitive rates while they are still available, as it’s possible for the market to remain volatile in the future months.
James Blower also believes it is worth investing for a full year to ensure a higher return on your money.
He suggests that you don’t fix your loan for more than one year, in case interest rates rise.
Blower stated, “I believe that savings rates are likely be stable for the next couple of months, but everything else points to rates improving by 2022.”
“My advice for savers is that fixed rate rates are attractive enough that they tie in, as opposed to easy access. This applies to those who can lock away their money, but don’t fix it beyond one-year.