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Consumer expert Laura Pomfret shared crucial savings advice on BBC Morning Live as millions leave cash earning no interest

A BBC specialist has issued a warning to anyone with £5,000 sitting in their bank account. Consumer expert Laura Pomfret featured on BBC Morning Live as the country faces a fresh cost of living crisis triggered by the Iran conflict pushing fuel and food costs sharply higher.

Ms Pomfret told presenters Greg Rutherford and Holly Hamilton that recent research revealed millions are leaving substantial amounts of money in their current accounts while earning virtually no interest.

Ms Pomfret said: "It feels like things are harder than ever. But some of us do still have cash. We do still have it in our current account. And there's been some interesting stats out. So, banking provider Chase, they did a survey and found that one in six people that they questioned admitted to leaving more than £5,000 in their current account.

"And digging a bit deeper, Yorkshire Building Society estimates there's around £411 billion pounds sitting idle in current accounts. Some people do keep their savings in their current account. And the problem with leaving it in current account is it is probably making little or no interest."

Presenter Holly said: "It's almost psychological, isn't it? That idea of just having, you know, you say people have £5,000 sitting in there are kind It makes them feel nice to know that money is there and they can access it. But what's the right amount then? How much should you be putting in your savings account, and how much should you have in your current account?"

Ms Pomfret urged individuals, even those with relatively modest amounts, to deposit them in savings accounts - explaining that the interest accrued throughout the year could prove extremely beneficial.

She explained: "If you are one of these people who has, whether it be an extra £2-300, an extra £1,000 or more, if you moved that money, let's say you had £1,000 in your current account and you're just keeping it there to make you feel better.

"If you moved it to a saver that was paying 4%, you would make £40 across that year. And that could pay for a grocery shop, it could pay for a birthday present, it could pay for a nice meal. It's free money, but because you've not got it in there, you've got it in the current account, it's not making it. And so, starting small, it doesn't have to be an awful lot, but getting into this mentality that if I don't need that money right now, if I don't need it for the immediate buffer, the immediate bills, having it just in a separate account, making money is really good practice. You can start small, and you can build from there."

Advice on accounts available:

• Easy access saver. Mr Pomfret said: “Your main one is an easy access saver and it literally does what it says on the tin. You can withdraw money when you need it. You can do it multiple times per year. These are where the interest rates are variable. So you may open an easy access saver with an interest rate, and that may change. It may go up. It may go down. But at least you can get access to your money. It’s good flexibility for people that can’t quite commit to kind of lock it away.”
• Fixed rate saver. She said: “This is where you’re locking money away for a period of time for a fixed rateand so these are usually one, two, sometimes three years. You would have to be confident enough that you didn’t need access to that money. There may be a penalty to bring it out. You may not be able to get access to it. Some people might put a house deposit in there if you building a house deposit and you know, you’re not going to buy in the next one, two years but it’s going to be there.”
• Notice account. Ms Pomfret said: “These aren’t as common, but what you see is that you can put money in there and you just need to give the provider notice before you take it out and they’ll say how long. It could be a 90 day, it might be a 140 day. So that’s not as long as locking it away for a year, but you’re not going to be able to access to it immediately.”
• Regular saver. Mr Pomfret described it as one of her ‘favourites’ because ‘that’s your first step into saving’. She saidL “If you want to get into saving an amount of money, a regular saver might have a cap. So, it might say you can save up to £2,000, £250 a month, but you’ll get a really good interest rate because the provider can cap that and know that you’re not putting loads of money into it, but you can get high interest rates on it.”