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After years of low returns on savings, savers are urged to shop around for better interest rates as rival banks offer higher returns.
For ten years until 2021, only a few savers bothered to shop around due to the combination of rock-bottom returns and consumer apathy.
However, experts say the market is now at a “tipping point”, and customers should consider switching banks.
Financial Conduct Authority research conducted in 2015 found that 80% of easy-access accounts had not been switched in at least three years. However, the Bank Rate has soared to 4%, compared to 0.1% at the end of 2021, and the average easy-access account now pays 1.55%, up from 0.15% last year.
Anna Bowes, of comparison site Savings Champion, said:
“When the cost of living is rising so much, it’s more important than ever to earn more money on your savings. Hopefully, we are at a tipping point now where people are realising that they shouldn’t let the banks take their interest.”
However, banks have been accused of denying savers interest by not passing on higher returns to their customers. For example, the average easy-access rate is 2.45 percentage points below the Bank Rate, and some banks offer even less.
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Savings guidance from FCA’s Moneyhelper website
Some banks do not automatically offer bonus rates to their existing customers but instead require them to opt in. Sometimes, rates depend on when an account was opened. Some banks hide rate increases behind generic account names, making it hard to identify whether a customer receives the higher rate.
Ms Bowes suggested that savers should log into their accounts to check whether they are on the best rate available and, if not, call their bank.
She also noted that the simplest way to switch for a better rate is to change to a new account internally at your bank or provider, but some banks make it hard to switch internally.
Savers should consider shopping around and looking for a better deal elsewhere if their provider requires them to close their account, withdraw their money, and open a new one into which to pay.
If you need help or advice, then please do not hesitate to contact us.