Even with a wide range of investment opportunities available, including equities, bonds, and property, for many savers, cash remains their favourite way to manage their long-term wealth.

While this is down to personal preference, it seems that many savers are simply depositing their money without checking they’re receiving as much interest as they could – or indeed, any at all.

According to AJ Bell, data from the Bank of England (BoE) shows that around £280 billion in savings is simply sitting in accounts which pay no interest at all.

This is a major shift from £39 billion in October 2008, when interest rates were also 4.5%. For today’s savers, just a 3% return could have earned them a collective £6.9 billion.

Money saved in a zero- or low-rate savings account over the long term is not only failing to deliver a return, but it could actually lose value in real terms if inflation rises.

Read on to find out how to get the most out of your cash savings.

Savers often find cash to be a comforting, familiar option, easy to access and not at the mercy of the markets

Cash can often feel comforting, making it an appealing savings option. You might like its dependable, predictable nature, or simply not want to introduce any level of risk associated with investments.

Plus, cash savings are there when you need them. They’re liquid, highly accessible (depending on the terms of your account), and not at the mercy of the markets in the same ways as stocks and bonds can be.

In fact, market volatility in the early months of 2025 seems to have persuaded more people to shift their savings to cash.

MoneyAge reports that 56% of DIY investors increased their exposure to cash in the three months from February to April 2025, following uncertainty over the trade tariffs imposed by President Trump.

Protecting your savings from inflation and low returns

However, while savers have every right to manage their wealth according to their wishes, not carrying out some due diligence before depositing cash could mean you’re missing out on potential rewards. As you saw above, not holding your wealth in an account with a competitive interest rate could see you lose out on valuable interest.

Not only this, but savings in zero-rate accounts will actually have their real value eroded by inflation.

While £100 will always be £100, rising inflation means the costs of goods and services are increasing, reducing the actual purchasing power of this money.

For example, if you put £100 in a savings account with a 1% interest rate, you’ll have £101 the following year. But if the rate of inflation is 5%, goods that were £100 now cost £105. Even though your savings have grown, they haven’t kept up with the rising cost of goods and services.

Essentially, unless your interest rate is above the level of inflation, your savings won’t stretch as far. While this might not be an issue when inflation is low, higher rates of inflation can make a real difference.

Smart cash savings can be an important part of your wealth portfolio

Cash can nonetheless be a strong part of a well-diversified portfolio, if you carry out your research beforehand and look at how to get the best returns.

Or you can talk to us about our IP CashHub, where you can allocate and diversify your cash savings across multiple accounts, helping your cash to work harder, and smarter.

Here are four important things to consider when you’re saving cash.

1. Avoid using your current account as a “stash”

Current accounts tend to have very low interest rates, if any at all, and money will likely be coming in and out all the time.

So, it can be sensible to work out your household budget, ensuring your account has enough in to cover all your bills and essentials without going overdrawn. Then, you can shift any remaining cash into a higher-rate account.

2. Think about what you need from your savings account

Your personal goals and objectives can define the most prudent ways to manage your cash. For example, as the name suggests, an easy access account allows you to make withdrawals as and when you need. However, the interest rate may be lower on this type of account.

Meanwhile, a fixed-rate account will give you an established level of interest, but you can’t access your cash during the fixed period. And some providers offer “bonus” savings accounts, which reward you for every month you resist the temptation to dip into your savings.

Finding the right account can help you achieve your desired results from your savings, whether that’s quick access, higher returns or more motivation to save.

3. Remember, you may need to pay tax on interest

While searching for the highest interest rate is an effective way to maximise returns, it’s worth bearing in mind that savings interest is potentially taxable.

Your Personal Savings Allowance (PSA) is the amount you can receive in interest before paying tax on it.

Each tax year:

  • Basic-rate taxpayers can earn £1,000 of tax-free interest
  • Higher-rate taxpayers can earn £500 of tax-free interest
  • Additional-rate taxpayers have a zero threshold, so have no tax-free interest allowance.

According to MoneySavingExpert, as of August 2025, basic-rate taxpayers need about £20,000 in the top easy access savings account before they’ll exceed the tax threshold. For higher-rate taxpayers, it’s only about £10,000.

So, it’s worth doing your homework, bearing in mind how much you’re likely to save, which tax band you’re in, and where the most tax-efficient place for your savings is likely to be.

4. Consider a Cash ISA

Cash ISAs are becoming increasingly popular with savers. In fact, in July 2025, MoneyAge reported figures from one provider that saw an estimated 100,000 savers open a Cash ISA over the past year, compared with 43,000 in the previous 12 month-period.

You can contribute up to £20,000 across your ISAs in the 2025/26 tax year, and using a portion of this allowance on a Cash ISA could be worth considering. Interest is free from Income Tax, as are future withdrawals, so it’s an effective tool for future planning.

You can generally withdraw money any time you like, although rules for this vary between accounts. For example, some have annual withdrawal limits, or ask for a notice period before you take money out.

Get in touch

Managed well, cash savings can be a great addition to your wealth portfolio. That’s why we launched the IP CashHub, to help your cash work harder, securely and efficiently, and with minimal hassle.

You can diversify your cash savings across multiple providers, helping you maximise returns, reduce risk, and stay in control. Plus, you can manage your entire cash savings portfolio from one centralised online portal.

If you’d like to find out more about IP CashHub, or cash savings in general, we’d be happy to help. Email hello@intelligentpensions.com or call 0800 077 8807.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.