Cash calculator

In everyday terms

When we talk about the "average interest rate on cash," we're not talking about the best savings rates you might see advertised. We're talking about what people and businesses actually earn on their money in practice, which is typically lower.

Based on Bank of England data, the average interest actually earned on cash in the UK is around 2.6% to 2.8%, with a realistic range of about 2.4% to 3.0% depending on when you measure and who you include.

This is lower than the best savings rates available because:

• A lot of money sits in current accounts that pay relatively little interest
• Not everyone moves their money to the highest-paying accounts
• Businesses often keep large amounts in operational accounts for day-to-day use

What do we mean by "cash"?

For this calculation, "cash" includes:

• Current accounts: the accounts you use for everyday spending
• Savings accounts: including easy-access, notice and fixed-term accounts
• Business and public sector deposits: money held by companies and government bodies

It doesn't include:

• ISAs (Individual Savings Accounts)
• Investments, shares, or bonds
• Money market funds

Where does this number come from?

We use official data published by the Bank of England, specifically their "effective interest rates" statistics. These measure the interest actually being paid on deposits across the UK, not the headline rates banks advertise to attract new customers.

The interest rates (November 2025)

Source: Bank of England Effective Interest Rates, November 2025

How money is typically split

Bank of England data shows that, for households, the majority of deposits (around 55% to 60%) are held in savings accounts rather than current accounts. When you include businesses, which tend to hold more in operational accounts, the split is closer to 50/50.

Source: Bank of England Bankstats Tables

The calculation

Here's how we work out the average rate, using a blend of household and business deposits:

The maths:

(45% × 1.85%) + (55% × 3.40%) = 2.70%

So the average interest actually earned on cash across the UK economy is approximately 2.7%.

Why is this lower than advertised rates?

You might see savings accounts advertised at 4% or even 5%. So why is the average only around 2.7%?

1. Current accounts pay less
Most people keep money in their current account for bills and spending. These accounts typically pay much lower interest than dedicated savings accounts, often under 2%.

2. Not everyone switches
Many people leave money in accounts that don't pay the best rates. Research from the Financial Conduct Authority shows that "cash inertia" is common; people don't always move their money even when better options are available.

Source: FCA Update on Cash Savings, September 2024

3. Businesses prioritise access over returns
Companies often need to keep large cash balances ready for payroll, suppliers and operations. They're paying for flexibility, not maximising interest.

What this means for you

This average rate is useful context, but it's not a prediction or a guarantee. It's a snapshot of what's actually happening across the economy.

Start by checking what you're actually earning. Look at all the accounts where you hold cash: current accounts, savings accounts, business accounts, and note down the interest rates. You might be surprised at how much is sitting in accounts paying very little.

If you want to earn more on your savings:

• Check whether your current account pays interest (and at what rate)
• Consider moving spare cash to a dedicated savings account
• Compare rates regularly, as they change when the Bank of England adjusts interest rates

Or let us do the hard work for you. At Cascade, our cash management service takes the hassle out of maximising your returns. We monitor the market, spread your cash across the best-paying accounts and keep everything within Financial Services Compensation Scheme (FSCS) protection limits, so you get better rates without the admin.

Try the calculator on this page to see how much more your cash could be earning with Cascade. Or, get in touch to speak to our team directly.

A note on uncertainty

The exact average depends on:

• When you measure: interest rates change over time
• Who you include: households, businesses and public bodies all have different patterns
• How you define "cash": different definitions give slightly different answers

That's why we give a range of 2.4% to 3.0% rather than a single precise figure. The central estimate of around 2.7% is our best assessment based on current Bank of England data.