Savers missing out on £566 and urged to do this one thing | Personal Finance | Finance

Savers with an average savings stash of £17,365 are being told to shop around for the best rate for their cash over fears their money is in low-paying accounts.

One expert has said that someone with savings could earn 4.70% interest on their cash or £816 in interest each year.

If the same savings were with on the average rate (1.44%) offered by the Big 5 Banks, they’d earn £250, so a difference of £566.

The amount of interest drops to £189 for the average of the lowest 20 easy access savings rate paying 1.09%.

TotallyMoney said millions of savers could be missing out on the best rates, and losing out, as one in three (37%) people haven’t switched for five years, and 27% have never switched.

TotallyMoney is urging customers to make their money work for them, and to shift their savings to an inflation-busting account, with commentary provided by Alastair Douglas, and Andrew Hagger.

In July 2023, the Financial Services Authority published its Cash Savings Market Review, meaning banks and building societies were expected to offer better deals and to pass on the benefits of higher Bank of England rates to savers. However, 18 months later, research shows that many savers might still be seeing their spending power being worn away by inflation which currently sits at 2.5%.

The table below highlights 20 of the poorest savings accounts for people who want to deposit and withdraw money without restrictions.

TSB’s Save Well account pays just 0.5% interest while the Halifax Reward Saver pays 1.25%. The current rate of inflation, is 3.5% which means savers are losing money if their accounts are paying less.

There are easy access acounts paying more including Revolut, although to get the best deals you may need to hold a current account with your bank.

Savers might also want to consider government gilts which can pay up to 7% although savers might need to take financial advice before committing their savings to a long term asset.

Alastair Douglas, CEO of TotallyMoney said savers could set up a regular reminder to double check the interest rate terms.

“That’s because some banks are paying well below the rate of inflation, meaning your spending power is reducing as the cost of living increases.

“Putting your money in a top savings account can also earn you money, which you could put towards your bills and shopping, or even a special treat. The average saver could bank more than £800 in interest compared to just £250 with an average account from one of the Big Four banks.

“When shopping around, keep an open mind, and consider smaller or newer banks and building societies. They’ll often offer some of the best rates in a bid to try and win customers from the big high street providers. And under the Financial Services Compensation Scheme, up to £85,000 per person and per bank, building society or credit union is protected.

Andrew Hagger, personal finance expert of Moneycomms.co.uk which carried out the research, urged savers to shop around.

“It’s quick and easy to open a new savings account online these days so I’d recommend that savers check the rate they are currently earning and if it’s lagging behind the market then move it and boost your interest income.

“There’s still way too much money sitting in poor paying accounts, if consumers don’t act and switch to something better they are simply allowing their bank to profit at their expense.”