Savers urged to check interest rates regularly
UK savers could be missing out on a massive £9.4 billion a year by failing to check the interest rate paid on their savings account and switching to a better deal. moneysupermarket.com, urges all savers to check their rates regularly and take action to ensure their money is working as hard as possible for them.
Research by moneysupermarket.com has found that apathy among savers is increasing, with 36 per cent of all savers never having checked their savings rate, (up from 31 per cent last year) despite holding their accounts for an average of seven years. What's more alarming is that over half (57 per cent) have never switched savings accounts in order to get a better deal. As a result, savers are missing the opportunity to gain the maximum return on their savings pot, which could be worth up to an extra £245 a year on £10,000 savings, or a whopping £1,715 over seven years.
Savers who have not checked their rate will most likely have money languishing in discontinued accounts that are no longer available to new customers. The average rate for discontinued accounts among the main high street savings providers is 0.3 per cent AER. Of those who have checked the interest rate since taking out their account, 41 per cent have been disappointed to find that their rate had gone down.
Kevin Mountford, head of banking at moneysupermarket.com said: "We have seen a year on year increase of people not checking their savings rate, with over a third failing to ever check their current deal. Our findings also show a third of savers (30 per cent) opened their account over ten years ago, but when it comes to savings, loyalty does not pay, and these customers are most likely getting a raw deal on their savings. Generally speaking, if you opened a savings account over 12 months ago, you will probably find the account will now be paying a much lower rate that you signed up for.
"Clearly many savers are reluctant to shop around for the best rate; a quarter (26 per cent) don't feel that it's worth switching in this low rate environment, and just under a fifth (19 per cent) cannot be bothered to switch their account. However, getting a good deal on your savings doesn't have to be a headache and not every saver will want to continually chase the highest interest rate available. For those that want to switch to a good deal and remain on it without running the risk of bonuses or withdrawal penalties, there are a number of accounts on the market that have performed well since Base Rate dropped to 0.5 per cent, making it easier for customers to keep an eye on their rate.
"Whatever product you opt for, our research highlights precisely why it is so important that savers be proactive in checking their rates, as they are likely to be missing out on a large amount of interest. Remaining apathetic at this time plays into the hand of the banks and will cost consumers dearly in the long run.
"Banks are reluctant to inform customers of rate changes, so the onus should always be on the customer to ensure they are getting the best deal. We encourage all savers to get online or call their bank to find out what rate they are currently on, then search for the best rate available and switch as soon as possible to avoid any further loss of income."