Loyalty can pay if the account is right!

Michelle Slade,analyst at Moneyfacts.co.uk, comments: “The savings market at the moment is a hotly contested arena. The credit crunch has seen institutions upping their game and launching products offering fantastic rates. The result being that some institutions now have in excess of 20 plus products to choose from.

“Whilst a wide choice is a positive, the difference between the highest and lowest rates at some institutions is as much as 5.95%. Putting it another way, on a £2,000 balance you could be losing out on an additional £119 interest each year by choosing the wrong account.

“At a time when banks and building societies are trying to maintain customer’s loyalty, you would expect them to advise customers that they could be getting a much better rate. Unfortunately this doesn’t always appear to be the case.

“The majority of the accounts paying the lowest rates are branch based accounts. It appears that savers are being heavily penalised for wanting access to a branch as opposed to using an online account. Although the administration of online accounts is cheaper and easier for the institutions does it really account for such large differences between the rates offered.

So what should you do!

1. Check the rate you are currently receiving on your savings - With rates as high as 6.06% gross on no notice accounts and 6.41% gross on notice accounts, you could be losing out on hundreds of pounds of interest, particularly if you have large savings balances.

2. Approach your current savings provider – It may have an account with a much better rate of interest that you can switch to.

3. Check best buy tables – By checking out what other institutions have to offer, you could get a much higher rate for your savings.

4. Make sure you use your ISA allowance – With the end of another tax year fast approaching, the battle is fierce between the institutions to attract their slice of the tax-free market. Rates as high as 6.35% can be found

5. Decide whether you will need access to your money in the near future – Fixed rate accounts offer exceptional rates of up to 6.70%. The only downside is that you can’t get access to your money during the length of the fixed period. So think carefully before locking your savings away.