When was the last time you switched your cash savings account to find a better interest rate?
Switching your cash can lead to a more competitive rate of return for your savings, but new research suggests it doesn’t happen as often as it should.
According to the research by Hargreaves Lansdown, 49% of people surveyed reported not having switched their savings accounts in the past five years.
And 35% said they have never switched cash savings accounts.
Women are less likely to have switched than men. 40% of women surveyed said they have never switched, compared with 30% of men.
According to the research, the most common reason for this switching apathy was the perception that interest rates are too low to make it worth the effort.
Savers are also staying put because they trust their existing bank or believe it would involve too much hassle to switch banks.
However, rising interest rates since the end of last year, as the Bank of England attempts to tackle rising prices, could make it more attractive to switch savings accounts.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said:
“It was easier to see why people didn’t think it was worth the effort of switching in previous years, when rates were so low, but rises in recent months have pushed up the most competitive rates to 2.75%.
“So if you’re earning next to nothing in a miserable high street savings account paying 0.4%, you could make almost seven times the interest by switching to the most competitive easy access rate on the market, or more than 11 times the interest by tying your money up for a year (4.55%).
“And this is only the half of it, because the longer you leave money languishing in an account, the lower the rate tends to drop. It’s one reason why we have £267.8 billion sitting in accounts paying no interest at all.”
When considering switching, always shop around and do your homework by looking carefully at the terms of the account on offer and by all means get in touch.
In a rising interest rate environment, you could be locked into an interest rate that seems competitive today but looks less attractive in the future during the fixed period of the account.