Experts say people could earn £600 extra with simple change

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Money experts say the average saver could be missing out on £600 a year. TotallyMoney has investigated how much customers could be losing by not banking their savings in an inflation-busting account.

It said depositing the average savings balance (£17,365) in the market-leading easy access savings account (offering 4.96%) would earn £861 per year in interest, compared to just £220 on a rate of 1.27% - a difference of £641. With the inflation rate at 2.3%, anybody with a lower savings rate will effectively be losing money, as their buying power is gradually being reduced.

The 20 worst easy savings accounts offer an average rate of just 1.27%, considerably lower than the Bank of England’s 5.25% base rate — with some banks going as low as 0.50%, it said, while the big five banks offer average rates of 3.04% on their best accounts.

With balances of up to £85,000 protected Financial Services Compensation Scheme, expert Alastair Douglas has urged customers to ditch low rates and to switch their savings, with additional calculations and advice provided by Andrew Hagger, personal finance expert at Moneycomms.co.uk.

Rates as low as 0.50% and as high as 4.96%

Most easy-access savings accounts allow you to make regular deposits and withdraw money whenever you like, making them the perfect choice for being able to save and spend. However, Annual Equivalent Rates (AERs) on offer can vary considerably. Some are above inflation (meaning you’re effectively earning money), while other accounts offer rates which are below inflation (meaning it’s growing slower, and is effectively losing value).

TotallyMoney said the table below showed how much customers could earn with the top easy access (no restrictions) account provided by Kent Alliance (at 4.96%), compared to the average rate of the top 50 (4.66%), the average of the best easy access savings offered by the big five banks (HSBC, Lloyds, Barclays, NatWest and Santander — at 3.04%), and finally, the average of the 20 easy access savings accounts with the worst rates (1.27%).

For the average savings balance of £17,365, the market-leading Kent Alliance account could earn £861.30 in interest per year, but just £220.54 on a rate of 1.27% (a difference of £640.76).

Balance

Top easy access

4.96%

Average top 50

4.66%

Average big 5 3.04%

Average 20 lowest 1.27%

£100

£4.96

£4.66

£3.04

£1.27

£250

£12.40

£11.65

£7.60

£3.18

£500

£24.80

£23.30

£15.20

£6.35

£1,000

£49.60

£46.60

£30.40

£12.70

£2,500

£124.00

£116.50

£76.00

£31.75

£5,000

£248.00

£233.00

£152.00

£63.50

£10,000

£496.00

£466.00

£304.00

£127.00

£15,000

£744.00

£699.00

£456.00

£190.50

£17,365

£861.30

£809.21

£527.90

£220.54

£20,000

£992.00

£932.00

£608.00

£254.00

£25,000

£1,240.00

£1,165.00

£760.00

£317.50

£50,000

£2,480.00

£2,330.00

£1,520.00

£635.00

£85,000

£4,216.00

£3,961.00

£2,584.00

£1,079.50

TotallyMoney research conducted by Moneycomms.co.uk May 2024


The Financial Services Compensation Scheme (FSCS) protects savings up to £85,000 per eligible person, bank, building society or credit union, or up to £170,000 for joint accounts - meaning customers shouldn’t worry about moving to a smaller bank to secure the best rates.

The table below looks at 20 of the worst savings accounts and their rates, some going as low as 0.50%.

Bank

Account

Rate

TSB

Easy Savings

1.60%

Melton Building Society

Easy save

1.51%

Halifax

Everyday Saver

1.50%

Bank of Scotland

Access saver

1.50%

Paragon Bank

Triple Access (14)

1.50%

Paragon Bank

Double Access (8)

1.50%

Lloyds Bank

Easy Saver

1.45%

Halifax

Reward Saver

1.35%

Halifax

Bonus Saver

1.35%

Co-Op Bank

Select Access

1.31%

Sainsbury's Bank

Extra Saver

1.30%

Sainsbury's Bank

Defined Access Saver

1.30%

Santander

Limited Access

1.20%

Barclays

Everyday Saver

1.16%

Bank of Scotland

Advantage Saver

1.05%

Union Bank of India

Savings A/C

1.00%

NS&I

Investment Account

1.00%

Punjab National Bank

Savings A/C

0.75%

TSB

Save Well

0.50%

Average

1.27%

TotallyMoney research conducted by Moneycomms.co.uk May 2024


While the Current Account Switch Service doesn’t cover savings accounts, opening a savings account is easy, and won’t require a credit check. The money can be moved between banks with a simple transfer.

Alastair Douglas, CEO of TotallyMoney, said: “The average saver could be missing out on more than £600 per year — which is a considerable amount, given how much the cost of living has increased. The extra income could be used to cover bills and expenses, left in savings so it continues to grow, or be put towards a special purchase.

“Double check your rate and make sure your money’s working for you. Loyalty doesn’t pay, and if your bank isn't paying you, then they’re making money from you. Don’t be worried about moving your balance to a smaller bank either, as long as they’re registered with the Financial Services Compensation Scheme, £85,000 of your money should be covered.

“If you’re struggling to save, then consider downloading a personal finance app which can let you connect an account via open banking. It should give you better insights into your finances, so you can avoid missing payments, dipping into your overdraft, or impacting your credit score. That way you can cut back on costly mistakes, and start moving forward.

“Whoever’s in charge of the country come July 5th, let’s hope they start delivering on their promise to deliver economic stability — with a focus on kick-starting people’s personal finances. Workers are now more than £10,000 a year worse off than they were in 2008. Something which will have impacted not just their ability to spend, but also to borrow and save.”

Andrew Hagger, personal finance expert, at Moneycomms.co.uk, added: “Opening a new savings rate is simple these days, so there's no excuse to leave your savings pot with a provider paying a substandard return. Go online and check your current interest rate on your savings, you may be in for a shock, just because your chosen account was a best buy at the time, it doesn't mean it is still a good deal now. The last couple of years have been much better for those lucky enough to have a decent savings balance - make the most of it and don't be afraid to move providers to secure a good rate on your cash.”