Half of us haven’t switched savings accounts for a year
Savers are being urged to avoid leaving money in bad paying accounts and switch before higher rates wear off – as one in two misses out, a survey finds
Savers are being urged to avoid leaving their money in bad paying accounts and to switch before the higher rates wear off – as one in two misses out, a survey has found.
Half of all savers have not switched savings rates in the past year and are unwillingly forgoing high payments in favor of historically low interest rates, according to Shawbrook Bank. In doing so, they will feel the full destructive force of rampant inflation as their purchasing power is rapidly eroded.
Banks offer the best interest rates in years thanks to sky-high inflation. Inflation is now at 10.1 percent and has been running in the double digits since September last year. Last week, the Bank of England raised interest rates for the twelfth time in a row – from 4.25 to 4.5 percent, the highest level since 2008.
Missing: Half of all savers have not changed their savings interest rate in the past year and unwittingly forego high payments in favor of historically low interest rates
However, millions of people could be missing out on hundreds of pounds in interest as they are said to be ‘shadowing’ their savings.
Adam Thrower, head of savings at Shawbrook Bank, says: ‘Even if we see interest rates rise further in the coming months, high interest rates won’t be around forever, so don’t think about your savings any longer. If you switch now, you can reap the benefits now and in the future.’
The interest that your bank pays on your savings account does not automatically improve with the rising base interest rate of the Bank of England. This means that without action you may not get any raises.
Overall, 15 percent of savers are still in accounts opened in 2017 or earlier, when interest rates were near their lowest. Meanwhile, two in five say they save in accounts that pay out less than 2.5 percent and more than a quarter deposit in accounts that pay out 2 percent or less.
That’s despite many accounts now paying more than 4 percent, while the average fix for a year offers 3.56 percent.
The main reason for inertia is that people stick with a bank they know and trust, according to the study. The Account Switch Service Guarantee means that your new bank will switch payments and transfer your balance, and your old bank will ensure that your old account is closed.