‘Get paid, not played’: Half have never switched savings provider, despite major banks still offering rates below 1%
- 76% of savers claim they would switch for a better rate, yet half have never done so
- Many of the big banks are still paying less than 1% in easily accessible savings
- Savers can earn up to 15 times more interest by switching to a best buy
Half of savers have never switched banks, despite analysis showing they would be better off more than £200 a year if they did.
Nearly four in five – or 76 percent – of savers say they would switch for a better interest rate, yet 49 percent have never done so, according to research from Atom Bank.
This is at a time when wide disparities have emerged between the best and worst rates in the market.
Don’t settle for a rip-off: Many of the big banks pay less than 1% on standard easy-to-access rates
The average easy access rate today is 2.1 percent, while the best available deal pays 3.82 percent.
Many Britons will fare much worse than the average rate, with many of the big banks continuing to pay rock bottom rates on their standard easy access rates – despite the Bank of England raising the base rate 12 times since December 2021.
Barclays and Santander both pay just 0.7 percent on their Everyday Saver accounts, Lloyds Bank pays 0.85 percent on its Everyday Saver and TSB pays 0.9 percent on its Easy Saver deal.
Virgin Money’s Everyday Saver pays an insulting 0.25 percent. Meanwhile, Halifax pays 0.9 per cent on the first £10,000 held within its Everyday Saver, and HSBC pays 1 per cent on its Flexible Saver.
Someone with their rainy day savings in Virgin Money’s Everyday Saver account could essentially earn 15 times more by switching to one of the best easy-to-access rates on the market.
– Check out the best easily accessible savings rates here.
At £10,000, that’s the difference between earning £25 and £375 over the course of a year.
There will be plenty of Brits who will do even worse than these meager returns.
This is because a huge amount of cash sits in checking accounts and pays no interest at all.
The financial benefits of being proactive and switching providers to get better rates are significant.
Of those who have previously switched savings providers, the majority do so only once every two to five years, according to Atom Bank.
This means they may have missed top deals since the Bank of England started raising rates.
Atom’s analysis shows that a saver could in fact earn an extra £227 a year in interest if they switched from one of the big banks’ easily accessible products to a challenger bank that pays a reasonable rate.
Last week, This is Money revealed how a saver who switches to an easily accessible rate just once a year will earn three times more interest than the average saver over time.
Someone with £10,000 at the start of 2008 moving their money to the best easily accessible rate at the start of each year would have accrued £4,461 in interest.
That’s £2,916 more than the average saver at the time, who would have earned just £1,545.
The lack of switching is partly due to the perception that switching is a challenge, with almost a quarter saying they have not switched because it is too much of a hassle.
However, most savings providers allow people to create an account, with some taking just five or ten minutes to complete.
Our graph shows how a saver on the average easily accessible savings rate in blue would have performed vastly worse than those who look for the best rate in red once a year. Meanwhile, those who took fixed rates of varying lengths, in orange, green and yellow, fared even better.
Mark Mullen, CEO of Atom Bank says: ‘The big banks are making a fortune by not passing rate hikes on to savers. We believe savers should be paid, not played by their bank.
Let’s not forget that most savers are covered by the FSCS for amounts up to £85,000 and have absolutely nothing to gain by staying loyal to ‘supposedly safer banks paying their ridiculous savings rates’.
“We need to encourage more awareness and competition to turn the knob on this issue.
‘The myth remains that switching banks is a time-consuming and difficult process. Savers today have the best rates at their fingertips, and just a few clicks on a decent app can save them a few hundred extra pounds a year.
“The sooner people realize that, the sooner big banks will be forced to change their ways.”