Maximum amount of money you should keep in your current account as most people unaware
An expert has revealed the maximum amount of money you should be looking to keep in your current account.
Changes are coming for those with savings or investments, as Chancellor of the Exchequer Rachel Reeves is set to announce the Autumn Budget statement in the House of Commons at around 12.30pm today (26 November).
Money is the topic on everyone's lips at the moment, as it's already been rumoured that a tourist tax of around £2 per night will be introduced, the two-child benefit cap will be scrapped, and the un-taxed total you can invest in your ISAs will be decreased.
While nothing is confirmed, one thing is for sure - big changes are on the horizon.
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So when it comes to your own finances, it's worth reassessing where your money is going, and whether you are one of those guilty of 'losing value' on your cash.
According to new data from Spring, 6.4 million current accounts across the country contain £10,000 or more, which means that all that cash is earning no interest at all - but this same issue applies to those who have less than five figures in the bank.
Experts claim that those with above £1,000 in their current account are also prone to losing cash, with only 0.04 percent of UK current accounts beating inflation by earning four percent or more, while most do nothing, meaning that the value of your money decreases.
Speaking to Metro, Derek Sprawling, the head of money at Spring, stated: "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."
Sprawling added that you should aim to keep between £500 and £1,000 in your current account as a 'buffer' on top of paying for bills and other essentials.
He said that anything over this amount would be better off 'working harder for you elsewhere', as many current accounts sit well below the rate of inflation, as excess funds here are 'losing value in real terms'.
The expert highlighted that inflation is currently at 3.8 percent, with £10,000 in a no-interest current account losing about £380 in real value over the course of a year at this rate.
Sprawling calls it 'the hidden cost of inaction', as the value is 'effectively shrinking', adding that switching accounts to earn higher returns is key.
"I encourage savers to shop around and find the best rate that works for you but also take into account your needs," he advised.
Martin Lewis advises on his Money Saving Expert website that two of the best easy access savings account to look into at the moment are Monument Bank (4.51 percent interest rate, min £25k) and Chase (4.5 percent).
The head of money at the company urged Brits: "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."
He said that those who don't want their money to be shut off in a savings account with 'lots of strings attached' when it comes to how often you can withdraw, there are actually numerous saving accounts which allow you to deposit and withdraw as you please.
It's all about finding the best solution for you, as Sprawling explained: "Weekly budgeting works well for many people - it helps maintain control and prevents overspending,
"Topping up your current account in line with your spending habits ensures you’re not leaving large sums exposed to inflation."
He said that you must be 'intentional', adding: "Know what you need, keep that amount accessible, and move the rest to an account that rewards you for saving."
Joshua Nair