Since the fall in interest rates in the aftermath of the 2008 financial crisis, savers have had little to cheer about.
The average low-threshold savings rate remained at less than 1 percent from 2010 to early 2022, falling to an all-time low of 0.18 percent in early 2021.
Interest rates have improved significantly over the past 12 months, but this has coincided with rampant inflation, which has not surpassed any savings rate in more than two years.
An average saver who deposited £10,000 into an easily accessible account in early 2008 would see their pot grow to just £11,545, based on moneyfacts historical price data.
Over 15 years, the average saver will have earned a pitiful 15 percent — just 1 percent a year. But This is Money’s research shows what would have happened if they moved their money once a year to the best rate for easy access.
And the difference is huge. Even during that low-interest era, the same saver could have turned his £10,000 into £14,461.
We’ve also crunched the numbers to show what their returns would have been in the top flat rates – and how a £10,000 saver could have turned it into £18,000 instead.
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
Don’t be the average saver
The long-term performance of savings accounts is often measured by the average interest rate.
But since This is Money constantly reminds readers, this average rate isn’t very good. In fact, the difference between average rates and the top deals found in our best buy savings tables is often huge.
But while some savers will have fared better, many would have earned even less interest by sitting on old accounts with abysmal rates of sometimes as little as 0.01 percent since the financial crisis.
The big banks were the main culprits for paying rock bottom rates, punishing loyal customers for not taking their money elsewhere.
But proactive savers who moved their money to secure a market-leading interest rate likely fared much better.
Using Moneyfacts data, we calculated how much better a saver would be if he had transferred his money to the best savings account at the beginning of each year from 2008 to now.
We also looked at the difference between someone sticking with easy access, compared to one-year, two-year, and five-year fixed-rate bills.
The gap between average and best buy
The average easy access rate today is 2.1 percent, while the best available easy access deal pays 3.81 percent.
But since 2008, there have been times when this gap has been even wider.
For example, in January 2010, the average easy-to-access rate paid 0.84 percent, despite the best deal on the market paying more than four times as much interest at 3.75 percent.
> See today’s best savings rates using our best-buy charts
How much interest has an average saver earned since 2008?
Savers who want to keep their money within reach have probably opted for easily accessible savings accounts.
It allows them to add and withdraw money as and when they want, and of course offers the flexibility to move the money to a new account at any time.
Regardless of the rate of return offered, savers should always have a rainy day fund in an easily accessible account for emergencies.
| Savings account | January 14 | January 15 | January 16 | January 17th | January 18 | January 19 | January 20 | 21st of January | January 22 | January 23 |
|---|---|---|---|---|---|---|---|---|---|---|
| Average percentage of easy access | 0.64% | 0.66% | 0.65% | 0.38% | 0.48% | 0.64% | 0.59% | 0.18% | 0.2% | 1.56% |
| Best easily accessible rate | 1.5% | 1.65% | 1% | 1.3% | 1.5% | 1.41% | 0.75% | 0.71% | 2.97% | 3.65% |
| Dear annual | 2% | 1.9% | 2.1% | 1.4% | 1.9% | 2.1% | 1.8% | 1% | 1.41% | 4.33% |
| Dear two-year-old | 2.4% | 2.33% | 2.75% | 1.6% | 2.1% | 2.3% | 1.95% | 1.05% | 1.6% | 4.68% |
| Best five years | 3.25% | 3.18% | 3.35% | 2.05% | 2.55% | 2.7% | 2.5% | 1.28% | 2.14% | 4.75% |
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 would have earned £1,545 at the time.
Their balance grows to £14,461, representing a 44.6 per cent increase since the start of 2008.
This is much more than the 15.4 percent growth during that time for the typical easy-access saver making the average rate.
Essentially, the annual switcher will have earned three times as much interest.
James Blower, founder of savings website Savings Guru, says: ‘I’m not surprised to see the numbers – they show that a £10,000 saver each year will have been around £200 better off moving to the highest paying bills .
“If you consider that many challenger savings banks have depositors with an average easily accessible balance of £20,000, that figure jumps to £400.
‘Considering that opening a new savings account takes less than 10 minutes, that is a fairly high return for the switching time.
“In terms of how often savers should switch, I would recommend that savers check at least quarterly.”
How much interest has an average fixed rate saver earned since 2008?
Once they’ve covered their rainy day pot, savers can decide to send excess savings to fixed rates. This is when they lock up their money for a period of time to get a higher return.
The problem with fixing is that there is no escape route, as withdrawals are generally not allowed before the end date.
So how much better would those who opted for flat rates in 2008 be interested today?
Someone who put £10,000 into the best one-year fix in January 2008 and then switched to the best deal on the market at the start of each year has earned £5,161 in interest in that time, according to Moneyfacts.
Compared to the average saver, they would be £3,616 better off – provided they hadn’t faced early withdrawal penalties.
Someone who instead opted for the best biennial solution every other year will see their £10,000 balance currently grow by 69.1 per cent to £16,914.
Meanwhile, savers who chose to switch to the best five-year deal every five years will see their £10,000 increase by more than 80 per cent to £18,024.
> View the best fixed rate savings deals here
Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and use it for free. We do not write articles to promote products. We do not allow any commercial relationship to compromise our editorial independence.