Getting less than 3% on your savings? Watch out for low rates on closed deals – and switch to these best bargains

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Data shows that savers with closed savings accounts with easy access are left short if they don’t switch to current savings accounts with easy access.

Closed deals are old accounts that no longer accept new money. Millions of people still have money in their accounts.

According to interest rate inspector Moneyfacts Compare, interest rates on deals taken out over the past two years have been lower than current, easily accessible rates. And savers could get much more by switching to new, better deals thanks to rising savings rates.

The difference between the average closed rate and the current rate on easy-access accounts has increased from 0.08 percentage points in July 2022 to 0.31 percentage points in July 2024.

In July 2022, the average closed rate was 0.51 percent, while the average rate for easily accessible homes was 0.59 percent.

Today, the average closing rate is 2.82 percent and the average rate for easy-access homes is 3.13 percent.

The margin between the average easily accessible closed rate and the current rate was largest in October 2023 (0.66 percentage points), when the average easily accessible closed rate was 2.52 percent, while the average current rate was 3.18 percent.

But savers should shop around for the best deals on the market to maximise their interest, rather than blindly accepting what their big bank offers.

The largest banks pay less than 2 percent on their most flexible live savings accounts, which is lower than the average general rates for easy access live and closed savings accounts of 3.13 percent and 2.82 percent respectively.

Rachel Springall, financial expert at Moneyfacts Compare, said: ‘Savers are being disadvantaged if they don’t proactively review and switch their closed easy access accounts.

‘Over the past two years, the average rate on a live easy access account has been higher than the average closed rate, despite base rate increases by the Bank of England and numerous calls for the major banks to improve savings rates for existing customers.

‘Savers need to shake off the apathy they have about moving their pots, otherwise they will be left disappointed when their loyalty is not rewarded.’

How do you get a better savings rate?

The simple message to savers is: switch to the best, easiest-to-access account on the market while interest rates are still high.

This is Money’s easy-to-access best buy tables still include easily accessible accounts with rates of 5 percent or more

Pursuit bench has an easy access account that pays an interest rate of 5.1 percent.

This is an increased rate with a 1 percent bonus that ends on January 16, 2025.

The underlying rate is a variable rate of 4.1 percent which will fall when the Bank of England base rate is cut.

If you want to open a Chase savings account with a higher interest rate, you only have until July 17, 2024.

Chase’s easy-access account requires a checking account, which savers can open in the Chase app. The Chase account also comes with 1 percent cash back in the first year of the account.

Oxbury Bank’s easy-access account pays a rate of 5.1 percent. It has a high minimum deposit of £20,000.

This account can be opened online. It is a limited, easy access account, so can be withdrawn from sale at any time.

Get a cash Isa for the best returns

Both Chase and Oxbury accounts are tax-free and savers can keep more of their interest by taking out a cash Isa instead.

With savers paying more tax due to high interest rates and a frozen personal savings exemption, savers with larger sums would be wise to consider an easily accessible cash Isa so they can take some of their interest out of the hands of the taxman.

Savers will have to pay tax on interest above the personal savings exemption of £1,000, but this amount will be reduced to £500 for higher rate taxpayers and zero for top rate taxpayers.

Plum’s easily accessible Isa* pays 5.17 per cent, making it the best overall rate for an easy-access cash Isa, but this includes a 0.86 per cent bonus for 12 months and those who make more than three withdrawals a year will see the rate drop to 3 per cent.

The other downside to Plum’s account is that it’s not flexible. A flexible Isa allows you to withdraw and repay money without using up any of your annual Isa allowance. The only caveat is that you have to replace the money in the same tax year.

The best flexible, easy-access cash Isa comes from Chip* by 5.1 percent, while Zopa pays 5.08 percent – ​​both are app-based accounts.

Isa from Paragon Bank is also flexible and pays 4.95 percent. It can be opened online but only allows two withdrawals per year before the rate drops to 1.50 percent.

Yorkshire Building Society’s easy access cash Isa* pays 4.5 percent and is flexible, with no withdrawal limits.

> Five of the best cash ISAs: here’s Money’s pick of the best deals

James Blower, founder of the website Savings Guru, said: ‘Markets are still pricing in a strong likelihood of the base rate being cut to 5 per cent in August, or almost certainly in September.

‘Given all this, the best purchase prices currently seem too high and it looks like a savings market.’