Better deal if you change your savings account

Savers who change their variable rate savings account on a regular basis are likely to get a better return than those who stay in the same account due to the fact that inertia and loyalty seem to reward the provider rather than the customer, according to Defaqto.

The average rate payable on an instant or easy access savings account for a £1,000 balance is currently 0.85% gross AER. The corresponding rate for such accounts that have been launched in 2009 is 1.93% gross AER as opposed to 0.68% gross AER for accounts launched before 2009.

The highest paying instant or easy access account currently pays 3.30% (Coventry Building Society's 1st Class Postal, which was launched on 15th July 2009) which for a £1,000 balance at its current rate would return £33.00 annually to a non-taxpayer; £26.40 for a basic rate taxpayer or £19.80 for a higher rate taxpayer.

Some accounts (Newcastle Building Society's Nova Plus, Progressive Building Society's Investment Share and Ulster Bank's Easy Access Savings) pay as little as 0.01% gross AER on a £1,000 balance which would give an annual return of £0.10 to a non-taxpayer; £0.08 for a basic rate taxpayer or £0.06 for a higher rate taxpayer.

David Black, banking specialist at Defaqto, said: "Anyone who has had the same variable rate savings account for a while can almost certainly get a better deal by transferring their funds to a new account.

"It has been apparent for a while that the instant and easy access accounts mentioned in the various best buy tables all have introductory bonuses. In the current low rate environment it makes sense to take advantage of such bonuses but remember to reassess the account's competitiveness periodically but do make sure that any withdrawal conditions are acceptable before you open a savings account.

"Many banks and building societies are concentrating their new funding requirements on retail deposits in preference to reliance upon the wholesale markets. Leapfrogging for position in the best buy tables is substantially less costly if they only offer the high rate to people opening the new account as opposed to giving the same high rate to all of their back book as well.

"Savers need to wake up to what's happening and get a better return on their funds by proactively jettisoning loyalty as it simply isn't paying."