Diminishing interest rates leave 22 million UK savers confused

As the next base rate decision approaches, a new savings report from uSwitch.com has indicated that the abundance of base rate cuts over recent months has left consumers baffled as to what level of interest they are earning with their main savings provider. 22 million savers (51.6%) say they have no idea what level of interest they currently earn on their main account, as the last six base rate cuts in six months have seen their savings interest rates diminish.

The report amongst UK adults has also revealed that 20.5 million savers (48%) can not recall what savings interest rate they were earning when they opened their main account..

Whilst no notice savings accounts with banks currently pay an average interest rate of 1.01% and building societies pay an even lower average of 0.76%, 2.6 million savers believe their provider hasn't provided them with enough information about how base rate cuts affect their savings rates and that is why they do not know their current savings rates. Similarly, 5.5 million (23.6%) savers say they have simply lost track of how the Bank of England base rate cuts have impacted their current interest rate. Whilst 3.7 million savers (16%) fill the more despondent category and believe all rates are currently so low that they have not attempted to check as the situation is too depressing.

Rumina Hassam, personal finance expert at uSwitch.com said: "Over the last six months the Bank of England base rate has been cut six times from 5% to an all time low of 0.5%, and there have been concerns over a savers' revolt. This has been further fuelled by figures which indicate that savers have withdrawn £2.3 billion from banks in January. It is of little wonder therefore that more than 22 million savers have no idea what level of interest they currently earn on their main account.

"What is concerning is the sheer number of savers who have become so despondent by the effects the base rate cuts that they have absolutely no idea about what level of interest they are earning. Whilst this consumer sentiment is understandable, this kind of apathy will play into providers' hands. If savers don't vote with their feet and move their money away from poor performing accounts provider will just carry on as they are."

However, it seems that the message may be sinking in that savers need to take action to get the best interest rates for their deposits. A quarter of savers (25.1% or 11.5 million) say they have switched their savings account in the last year, whilst 6.0 million savers (13.1%) say they have switched providers in the last month alone to get a better rate.

The research also revealed that 27.1 million UK savers (64.7%) want their provider to supply them with more information, and contact them more frequently to advise them on any changes to their savings rates. Six in ten (61%) say the best way to do this would be by a quick email, whilst 31% say they would welcome a letter outlining any changes.

Rumina Hassam concludes: "Savings providers' are duty bound to let their customers know when ever the interest rate on their savings account changes. However, this report indicates that providers may not be doing enough to let their customers know in a clear and transparent way when their interest rates change and for what reason. With the Bank of England base rate already at a historic low, and no one sure whether it will decrease again this week, it is more vital than ever that providers update savers if their interest rate declines at any stage."