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Savers missing out due to apathy over low interest rates

12th November 2013 Print

Over a quarter (26 per cent) of adults are stuck on low savings interest rates as they believe rates are so low it isn’t worth looking elsewhere according to a poll by MoneySuperMarket.  However, savers could be missing out on vital interest by not being savvy and switching to better deals and are missing out on savings rates six times has high as the average branch based account.
Bank of England data shows that the current average branch based savings rate is 0.26 per cent, and on a £10,000 balance this equates to a paltry £26 in interest over a year before tax. By comparison the current market leading easy access account, BM Savings Online Reward, pays 1.70 per cent AER. On a balance of £10,000 this will earn £170 in interest over 12 months, meaning savers could earn an extra £144 just by switching accounts.
However, the current account market is so buoyant at the moment with offers following the launch of the Current Account Switching Service that some current accounts even currently pay more interest than savings accounts. Nationwide offers the highest current account rate at 5.00 per cent AER on balances up to £2,500 for the first 12 months. To qualify you must pay £1,000 each month into the FlexDirect Current Account. Yorkshire and Clydesdale Bank’s also recently launched Current Account Direct, a new bank account which pays 4.00 per cent on balances up to £3,000 until 31 March, 2015, and two per cent thereafter.  Whilst Santander three per cent on balances between £3,000 and £20,000.
Kevin Mountford, head of banking at MoneySuperMarket, said: “It really is important for consumers not to be apathetic about their savings accounts or current accounts at the moment. Although rates may be low, the benefit of switching can be significant, and in some cases add up to hundreds of pounds if you have a sizeable savings pot. People can earn extra interest just by being proactive and switching to better paying easy access accounts or even current accounts.
“Incredibly, savers can earn more interest through their current account than most savings accounts at the moment. This is especially appealing for those savers out there who have been looking for decent returns on their savings over the last year. Whilst an easy access account paying 1.70 per cent interest is a good deal and much better than the average branch based deal of 0.26 per cent, the leading current account interest rate at present is 5.00 per cent, which savvy savers shouldn’t ignore. Now is the time for savers and current account holders to start thinking about switching and taking advantage of the great product ranges available on the market.”