Half of us haven’t switched savings accounts for a year

Savers are being urged not to leave their money in poor paying accounts and to switch before higher rates disappear – as one in two are missing out, a survey has found.

Half of all savers have not switched their savings rate in the past year and are unwittingly forgoing high payments in favour of record low rates, according to Shawbrook Bank. In doing so, they will feel the full destructive force of rampant inflation as their spending power is quickly eroded.

Banks are offering the best interest rates in years thanks to soaring inflation. Now at 10.1 per cent, inflation has been in double digits since last September. The Bank of England raised interest rates for the 12th consecutive time last week – from 4.25 to 4.5 per cent, the highest level since 2008. 

However, millions of people could be missing out on hundreds of pounds worth of interest, as they are said to be ‘ghosting’ their savings.

Adam Thrower, head of savings at Shawbrook Bank, says: ‘Even if we see rates rise further in the next couple of months, high rates won’t be around for ever so don’t ghost your savings any longer. Switching now will allow you to reap rewards now and into the future.’

The rate your bank pays on your savings account does not automatically improve in line with the Bank of England’s rising base rate. This means that without action, you may not be handed any increases.

In total, 15 per cent of savers are still in accounts opened in 2017 or earlier, when rates were near their lowest. Meanwhile, two in five say they are saving into accounts that pay less than 2.5 per cent and more than a quarter are paying into accounts earning 2 per cent or less.

That is despite many accounts now paying more than 4 per cent with the average one-year fix offering 3.56 per cent.

The main reason for inertia is because people are sticking with a bank they know and trust, according to the research. The Account Switch Service Guarantee means your new bank will switch payments and transfer your balance, and your old bank will take care of closing your old account.