What are you waiting for? Half of savers still won’t jump ship for a better savings deal even as rates peak
What are you waiting? Half of savers still won’t switch for a better savings deal, even when interest rates peak
- One in ten savers have not moved because they are waiting for interest rates to rise
- But experts believe that savings levels have probably peaked
- We ask whether it’s worth sticking with your savings account
Interest rates may have peaked – but half of savers still have no plans to switch accounts to get a better deal on saving.
Of those who have not yet moved to find a more generous rate, one in 10 say they are still waiting for rates to rise further, according to stockbroker Hargreaves Lansdowne.
Just over a quarter of those staying put say it’s because they’ve already secured the best possible deal. Only one in six savers plan to move in the next three months.
Inertia is another part of the problem, with one in 10 not bothering to move their savings and another 17 per cent of savers saying it was too much hassle to switch to an account with a better rate.
Time’s ticking: One in ten savers say they haven’t moved savings accounts because they’re waiting for interest rates to rise, but experts warn savings rates may have peaked
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Waiting savers are refusing to make a move despite the fact that the market may have peaked.
“When we asked people why they were staying put, one in ten said they were waiting for interest rates to rise. Unfortunately, it seems unlikely.
We asked the experts whether you should stay or ditch your savings account based on peak interest rates.
Is it worth waiting for better prices?
Even before the Bank of England decided to keep the key rate at 5.25 percent in September, pundits were calling the top of the cycle for savings rates.
There are several warning signs that the savings market has peaked and that this is as good as rates will get for the foreseeable future.
For example, last week NS&I pulled its best-selling 6.2 percent one-year fixed-rate bond account, which had been at the top of the Best Buy tables unbeaten for the five weeks it was on sale.
The best easy access account on the market is offered by Coventry Building Society and pays 5.2 per cent interest. The best one-year fixed rate bond is 6.12 per cent, available from Ahli United Bank through the Raisin UK platform.
Andrew Hager, founder of personal finance website MoneyComms, says: “We’ve almost peaked in terms of savings rates in the current cycle.
“Simply put, if you don’t switch now, it could cost you two ways. Let’s say you’re currently at a rate of one or two percent easy access – you’re already missing out on a possible three to four percent extra to your rate every day you delay.
“Secondly, the rate you move to could also be reduced in the coming weeks and months.
“If the key rate is raised by 0.25 per cent on November 2, we may see an additional 0.1 per cent adjustment to easy access rates from some providers, but this is by no means certain.”
“Trying to pick the exact top of the market is very difficult, but I feel like overall we’re at that point now, and I wouldn’t put off my decision based on the hope that you could get an extra 0.1 percent.”
“On £20,000 this will only give you an extra £20 a year – so for most savers with smaller balances it’s a negligible amount and not worth the wait.”
The best accounts at a glance
Easy access: Coventry BS – 5.2%
One-year fixed rate: Raisin UK – 6.12%
Two-year fixed rate: Union Bank of India – 6.05%
Money Easy Access Isa: Shawbrook – 4.93%
One Year Cash Isa: Virgin Money – 5.85%
Two-year cash Isa: NatWest – 5.65%
The products featured in this article have been independently selected by This is Money’s specialist journalists. If you open an account using links that have an asterisk, This is Money will earn an affiliate commission. We do not allow this to affect our editorial independence.
Should you still switch if rates have peaked?
Sarah Coles does not believe there will be a big or sudden drop in interest rates from the levels seen now.
She says: “Prices have to come down quite slowly, so some people still have to change.
“Those on a fixed rate deal that is coming to an end, who need to switch or will find themselves in an account paying a low interest rate, should look to move.
“As should anyone on a high street easy access account paying a pittance who could make more on a competitive easy access or flat rate account.
“Anyone in any easy access account who definitely won’t need some of the money for at least a year can take advantage of higher rates by fixing the period that makes the most sense for them should also try to move.”
But there are some savers for whom it won’t be as urgent to move savings accounts now.
Coles says: “If you’re in a high rate easy access account and you need the money to stay in easy access, you can afford to stay put.
“The same is true if you’re part way into a fixed rate deal, as you usually can’t move in that case anyway.”
Savers looking for table prices should be on the lookout to make the most of the good deals.
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