Bank of England<\/a> recently held its base rate at 4 per cent. Analysts generally expect an interest rate cut in either December or February and because most easy-access and fixed-rate savings accounts roughly follow the base rate, any cuts could reduce the interest you earn.<\/p>\nWith this in mind, experts say now is an ideal time to review your savings and lock in the best rates while they last.<\/p>\n
Here, we examine how much savers could make by moving their money, why so many are missing out, and what the best rates currently are.<\/p>\n
How much could you make?<\/p>\n
A typical high street bank offers an average rate on easy-access accounts \u2013 where money can be withdrawn at any time \u2013 of just 1.39 per cent. This gives a 12-month return of \u00a3347.50 on a \u00a325,000 deposit, according to the research. When adjusted for inflation, this represents a loss of \u00a3602.50 in real terms.<\/p>\n
By contrast, the top rates available pay around 4.5 per cent, providing a 12-month return of \u00a31,125, and a real return of \u00a3175 after inflation. Savers who make the switch could therefore earn an extra \u00a3777 by shopping around.<\/p>\n<\/p>\n
Adam French, head of news at moneyfactscompare.co.uk, said big banks are \u201ctaking too many savers for granted by paying them paltry returns\u201d on their savings.<\/p>\n
\u201cThe best way to fight back is to ditch your apathy,\u201d Mr French said. \u201cEven small differences in interest rates can make a big difference over time, especially when inflation is considered.<\/p>\n
French added: \u201cThey might also benefit from using cash ISAs to protect their savings from tax, which could bolster their return further.\u201d<\/p>\n
Savers can put \u00a320,000 into ISAs each year \u2013 in savings or investments \u2013 and these are shielded from tax. Otherwise, basic rate income tax payers pay 20 per cent income tax on interest over \u00a31,000 and higher rate payers pay 40 per cent on over \u00a3500.<\/p>\n
How much people are missing out on and why<\/p>\n
Despite better rates being available, millions of UK savers are sticking with low-interest current accounts.<\/p>\n
Research from Marcus by Goldman Sachs shows that 46 per cent of UK savers still hold money in current accounts \u2013 where rates are usually rock bottom -while 41 per cent admit they haven\u2019t moved their savings in the past year and have no plans to do so.<\/p>\n
Rob Basinger, head of product and marketing at Marcus by Goldman Sachs, said: \u201cToo many people are missing out on valuable returns because they believe keeping money in a current account is the best way to ensure it\u2019s available in an emergency.<\/p>\n
Tips for boosting your savings<\/p>\n
Having a range of different accounts, each with its own purpose, can help individuals make the most of their money, Basinger said. Here are the main types to consider:<\/p>\n
Easy access accounts \u2013 Ideal if you might need to withdraw funds without notice.<\/p>\n
Regular savings accounts \u2013 Require monthly deposits, with fixed or variable interest rates that can often be higher than other accounts.<\/p>\n
Fixed rate savings accounts \u2013 Lock in an interest rate for a set period, but access is restricted.<\/p>\n
Cash ISAs \u2013 Offer tax-free interest on savings, with annual deposit limits, making them a good way to grow a tax-free savings pot.<\/p>\n
The best current rates<\/p>\n
Two big-name easy-access accounts are currently paying 4.5 per cent.<\/p>\n
Ulster Bank, part of NatWest, offers 4.5 per cent on balances from \u00a35,000, including a one-year 2.75 per cent fixed bonus on top of its 1.75 per cent variable rate.<\/p>\n
This effectively guarantees a minimum rate for a year. After that, the account \u201cmatures\u201d and the rate drops, so savers will need to move their money. <\/p>\n<\/p>\n
Chase also pays 4.5 per cent to new customers, with a one-year 2 per cent fixed bonus on top of its 2.5 per cent variable rate. You first need to open its app-only current account to access the saver, though there is no hard credit check.<\/p>\n
For those seeking a straightforward, no-frills option, Hodge Bank offers 4.21 per cent. The account is open to all, has no bonus, and no withdrawal limits.
Savers who are likely to pay tax on interest might consider a cash ISA. <\/p>\n
Trading 212\u2019s cash ISA offers a competitive 4.53 per cent, made up of a 3.85 per cent variable rate plus a one-year 0.68 per cent fixed bonus for new customers.<\/p>\n","protected":false},"excerpt":{"rendered":"Experts say big banks are ‘taking too many savers for granted by paying them paltry returns’ on their…\n","protected":false},"author":2,"featured_media":268629,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[64,63,8878,99,186,5476,184,185,1781],"class_list":{"0":"post-268628","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-au","9":"tag-australia","10":"tag-banking","11":"tag-business","12":"tag-finance","13":"tag-investing","14":"tag-personal-finance","15":"tag-personalfinance","16":"tag-savings"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/268628","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=268628"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/268628\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/268629"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=268628"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=268628"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=268628"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}