Research commissioned by United Trust Bank (UTB) has found that SMEs are potentially missing out on approximately £2.29 billion1 of interest payments each year by leaving excess credit balances in current accounts and instant access savings accounts paying no or uncompetitive rates of interest.
Experts at the award-winning savings provider have calculated that the approximately £2.29 billion of extra revenue being lost could pay for 58,0002 new full-time staff earning the current average UK salary of
The research, carried out by independent savings expert Andrew Hagger of Moneycomms.co.uk, revealed the huge potential financial benefits of switching excess credit balances to a better paying account(s) and why it is worth moving some monies from instant access to longer term options if it aligns with the cash flow projections of individual businesses.
Looking at the scale of how much potential interest is being lost, if the full £133.5 billion3 in business sight deposits (current accounts and instant access accounts) was stagnating in high street bank instant access accounts at an average 1.44%4 interest, the annual interest return would be approximately £1.92 billion.
However, the same funds in a 30/45-day notice savings account (market average 3.15%4) would see the figure jump to approximately £4.21 billion. The £2.29 billion difference could potentially pay for more staff to increase productivity or invest in new premises, technology and equipment.
Analysis of business savings rates via provider websites was carried out from 30th April – 3rd May 2024. The data for the SME savings market was collated and an average for each product area was calculated as follows:
| SME Savings Product | Average Market Rate | Average Big 5 Bank *Rate |
| SME Instant Access | 2.50% | 1.44% |
| SME 30/45-day notice | 3.15% | 2.89% |
*Big 5 High Street Banks – NatWest/RBS, Barclays, HSBC, Santander and Lloyds/Bank of Scotland.
Research by Moneycomms.co.uk 30.04.2024
Andrew Hagger of Moneycomms, commented: “To enjoy the better rates on offer from non-mainstream providers, there’s no need to uproot the existing business current account relationship (which I appreciate many firms would be reluctant to do due to disruption/inconvenience) but there’s nothing to stop companies opening a separate business deposit account or accounts with the growing range of more specialist business savings banking providers offering a wider choice of more competitive savings options.”
Brian Todd of United Trust Bank, commented: “The rewards for businesses switching to better paying accounts are there for the taking. The more agile specialist and challenger business savings banks are tweaking rates frequently in the current climate to stay competitive and attract funds while big banks remain slow to react and continue to pay substantially lower interest rates by comparison.”
The information contained in this article shouldn’t be considered as financial advice and if you’re unsure about how to manage your savings, please seek advice from a professional financial advisor.
To view the full report from Andrew Hagger please visit : https://www.utbank.co.uk/sme-businesses-missing-out-on-credit-interest-earning-opportunities/
All interest rates and calculations were correct at the time the research was completed between the 30th April and 3rd May 2004.
1 – £2.29bn is £4.21bn (interest on £133.5bn at 3.15%) minus £1.92bn (interest on £133.5bn at 1.44%).
2 – 58,000 new staff. Average UK full time salary is £35,724 (ONS). £35,724 salary costs employers £39,463. £2.29bn / £39,463 = 58,029 rounded down to 58,000.
3 – £133.5bn is the total of SME sight credit balances (current accounts and instant access savings. – Source UK Finance Business Finance Review as of December 2023.
4 – Analysis of business savings rates via provider websites was carried out from 30th April – 3rd May 2024.