Millions in interest spurned as cash gathers moss in low-paying accounts

Savers are missing out on a total of around £8m a year because they are leaving their cash to languish in low-interest accounts, a recent study has found.

Despite the financial strain imposed by higher food prices and tighter credit, savers with an average deposit of £5,000 are letting up to £188 a year slip through their fingers by holding accounts paying interest below the Bank of England base rate.

Many people aren't paying enough attention to their savings and three in 10 have no idea what rate their account pays, research from the Post Office reveals.

Some £26.4bn was put into savings accounts in 2007, but much of that has not been accumulating as much interest as it could in higher-rate accounts.

Richard Norman, director of savings at the Post Office, said: "It's time savers started to take care of their savings by choosing a home for them wisely – especially in the current economic downturn. There are hundreds of poor-paying accounts, so people need to avoid them."

He added: "If you don't know what interest you are currently earning, contact your provider. If it is paying a low rate and you want the money to earn more then move it. Although it might be tough to put cash away at the moment, it is more important than ever to make sure your existing savings work as hard as they can for you."